Credit score as an essential part of financial services has slowly caught up in India over the past few years. There are also more players in the market compared to as recently as a little over a decade ago. That said, in a shift from purely financial services, the usage of credit scores is now moving towards alternate services including telecom providers.
In fact, landlords tend to refer to credit scores prior to renting out their property, as do prospective employers to understand how reliable and trustworthy an employee will prove to be, especially when it comes to hiring for job openings involving confidentiality and trust. On a more personal front, people are requesting for credit reports even when finalising marriages!
CIBIL is a Credit Information Company which collects information of an individual’s payments pertaining to loans and credit cards, this information is submitted by Banks to CIBIL where they create Credit Information Reports CIR and credit scores or Cibil Score and in turn these score is used to approve and evaluate loan applications to individuals. Approximately 79% of the loans approved for individuals only if their CIBIL score is greater than 750. Now for a limit period of Time they are providing Free CIBIL Score with Detailed Report.
As we all know that CIBIL calculate the score on criteria of 300-900. In this range there are several score will appear on report as per individual bank creditworthiness? Some of them are
1.0-1 This credit score represent that your credit history is almost null and you have not earned the credits.
2. 350-550 this score specify that you will not be able to apply for new credit card or loan because this score card reflect your poor credit history and repayment record.
3. 550-650 this score card represent that you are your score is quite ok and bank can trust you for new credit card or loan.
4. 650-750 if your credit score belong to this criterion then there will be no issue in approval of new credit card and loan.
5. 750-900 This is excellent score and if your credit score belongs to this criterion then you can apply for new credit card and loan quite easily.
What is a CIBIL score?
CIBIL is India’s oldest credit bureau, and hence enjoys the privilege of having credit scores being referred to as CIBIL scores colloquially. A score ranges between 300 and 900, and a higher score can prove to be advantageous when applying for a fresh line of credit.
In addition to CIBIL, there are three other credit bureaus, namely Equifax, Experian and CRIF High Mark operating in India as on date.
What is a free credit score?
In the USA, the Fair Credit Reporting Act (FCRA) requires each of the credit bureaus – namely Equifax, Experian and TransUnion – to provide a consumer with a free copy of the credit report, at the customer’s request, once every 12 months. These reports can be ordered simultaneously, or one from each company at a time. The Federal Trade Commission (FTC), the consumer protection agency in the United States enforces the FCRA with respect to credit information companies or bureaus.
In India however none of the credit bureaus offer free credit reports or scores currently, they are available to purchase on payment of a nominal fee. The process to obtain a score is both quick and easy, and it is recommended to check your score at regular intervals.
However, if you wish to have a free credit report, wherein India’s premier credit health management company in conjunction with the bureau offers a free credit report.
Follow below steps to get free CIBIL score
Once logged in to your Cibil account you can see:
1. Your CIBIL Score and Report.
2. Monitoring of your credit activity
3. Dashboard with all activity
Generally to get your CIBIL Score and Report they charge a one time fee of Rs 550 and for Bi-Annual Subscription with 2 Score Reports Rs 800, Quarterly Subscription with 4 Score Reports Rs 1200
Why do we need CIBIL reports?
Seeing the significance that CIBIL report has assumed in the recent past, it is only prudent for an individual to monitor and keep track of their scores. Hence the requirement for scores is paramount, and a free score would go a long way in promoting awareness and increasing usage of reports countrywide.
Take for example a case wherein Nitin applies for a home loan. Owing to a good score, his loan is approved at a competitive rate of interest in comparison to Sumit, who has a relatively lower score and hence gets a similar home loan at a higher rate. This results in substantial savings for Nitin over the tenure of the loan, a privilege that Sumit does not enjoy.
Hence, in order to remain credit healthy and financially fit, it is imperative to have a good credit score.
What should be my next step?
From the options currently available, do call for a report and check it at length together with your credit score. You can choose to avail of the services of a credit health management company if you believe that your score needs attention, and can be improved. Working with a trained credit counselor, you can rebuild your score and even enhance it given time and financial discipline.
Remember, it is the first step towards ensuring a secure financial future, so get started now.
How it Impacts you?
There are three credit bureaus present in India are CIBIL, Equifax, Experian. The CIBIL is widely used by the Banks and NBFCs. When you are filing an application for a loan to a bank or NBFC, they approach one of the credit bureaus present in India. The banks and NBFCs check the credit score and report before disbursing the loan.
Generally, they follow a minimum of 750 scores as eligibility to give the loan. It is a very good practice to check the credit report at a regular interval. If you notice something inaccuracies or differences in your credit report from the actual, you can raise a dispute claim and make it correct.
Beware or stop from below activities which can affect your CIBIL score.
Positive Factors of Credit Score
Facts that Affects Credit Score Negatively
Benefits of High CIBIL Score
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