Written By- Jaya Pathak
A CIBIL score is basically a three digit numerical representation of your credit worthiness. It is assigned by TransUnion Credit Information Bureau India Limited (CIBIL). It ranges from 300 to 900. Higher the score, better are the chances of approval of loan, credit cards and financial products with lower interest rates.
- If your CIBIL score lies between 750-900, the chances of your loan approval are quite high. You can get it with low interest rates.
- If your CIBIL score lies in the range of 650-749, there is a good chance of your loan approval. But the interest rates may be slightly higher.
- If your CIBIL score lies in the range of 550-649, you can get limited loan options with a high interest rate.
- If your CIBIL score lies in the range 300-549, the chances of your loan approval are very low. You are considered as a high-risk borrower.
What is accuracy in a CIBIL Score?
The accuracy in the CIBIL score represents that your financial history is correctly reflected in the credit report and score. It means that your personal details are mentioned correctly. All loans and credit cards are reported correctly. There are no missing or duplicate accounts. You have a properly recorded repayment history. There is no unauthorized loans and fraud related issues.
Why is it important to have a high credit score?
A high credit score will allow you to get loans at lower interest rates. As per your credit score if it lies above 750, it is considered as a very good score by banks and other lenders. It shows that you have repaid your loans on time and you can get credit at lower interest rates.
How to check the accuracy of your CIBIL report
- You can check your CIBIL credit report by two methods:
- Via online medium: You can visit the official website of CIBIL. There you can click Get Your CIBIL Score. You can register or log in by putting the required details. Your personal information such as name, PAN card, date of birth and contact details will be asked. After filling the required details, you will be offered to choose two options between paid and free report option. The free CIBIL report is available once per year. On the contrary, the paid reports are available for regular monitoring along with subscription plans.
- Via banks or NBFC: There are some banks and fintech apps which offers free CIBIL score checks. Examples- HDFC, ICICI, SBI, Bajaj FinServ and many more provide credit score reports.
- After getting your CIBIL report, you are required to verify your personal information. Check the accuracy of your personal details to avoid any identity mismatch.
- Afterwards, check your credit accounts and loan details. Make sure that all information is accurate. Check your account type and status. Double check whether your credit card limits and utilisation are properly recorded.
- You can check for duplicate or unknown accounts, if any. The unknown credit cards, loans and inquiries should not appear.
- You can verify the repayment history and late payments as they play a significant role. It may impact your CIBIL score. You can check for no missed or delayed payments if you have paid on time. Double check whether EMI payments are recorded as paid or not.
- Then you can check your credit inquiries. you can verify all inquiries were authorised by you. See the presence of any hard inquiry which can lower your score.
- The CIBIL report mentions written off or settled status for loans which are not fully repaid. you can ensure that all settled accounts are correctly marked and there is no any incorrect write offs for loans you have already repaid.
- You can raise a dispute with CIBIL if you find errors in your report. you can visit the official website and raise a dispute by submitting the supporting documents.
Factor influencing CIBIL score
Well, there are multiple factors that can hold your CIBIL score, we will look at the major ones: –
- Payment history: Payment history is the most important piece of your credit profile. It accounts for roughly 35% of your scores. If you have been responsible in the past, you can probably be trusted in future. So, avoid late payments at all costs. It is given 35% weightage while calculating credit score. Even a single missed EMI can reduce your credit score by 60 to 70 points.
- Credit utilization: Amounts owed or credit utilization as the second most important factor coming in at about 30% of your score. This part is important because notching a good credit score doesn’t mean that you don’t borrow. In fact, not using your credit is almost worse than using tons of it. You want to show that you can handle a reasonable amount of depth without going off the rails. If you are eligible for a total credit of, say ₹10,00,000 and you have consumed 5,00,000 in your credit cards, it means you have utilized 50% of the credit. A credit utilization of over 30% is seen as negative for your credit score.
- Length of your credit history: One of the more obvious factors in our credit score is the length of your credit history which accounts for 15% of your number. It is like in those old movies where a shop you want to let’s one of his regulars run up a tab because he knows he’s good for it. Same goes with credit period the longer you have been borrowing, the better.
- Types of credit: Types of credit accounts 10%. It reviews how many sources of borrowing you use like a car loan, mortgage, credit card. The more diverse, the better.
- New credit: New credit accounts for 10%. It takes into account how often you take on credit you don’t need like applying for a credit card at five of your favourite new stores.
- Defaulting on loans: If you have defaulted on a loan in the past, your chances of getting fresh credit is almost 0 similarly settling the loan or credit card account instead of paying it in full can also hold your score.
- Errors in credit report: Sometimes there may be errors in your credit report that portray you as a higher credit risk than you actually are. It can negatively impact your credit score.
- Applying for a lot of credit quickly: If you inquire for multiple loans in a short time, it shows that you are credit hungry which can damage your credit score. In a nutshell inquiring multiple loans in a short time reduces your credit score.
