No bank, fintech app, or credit provider wants to lend money to someone who lacks ‘creditability’ and may fail to repay the borrowed amount. They prefer borrowers with a good credit score. These credit scores (usually three-digit numbers) are based on records of loans, credit cards, and their repayment. CIBIL is a credit information company that maintains these credit reports and rates the borrowers accordingly.

cibil score

Millennials are perhaps the biggest borrowers of all time as there’s a swift shift from the ‘save first’ attitude of baby boomers and Gen X to the ‘consume first pay later’ approach of Gen Y and Z. Digitalisation has further accentuated the credit demand as there are several apps and online platforms to provide loans of all sizes and credit wallets, which lend you to make payments for online orders. Herein lies the importance of a good credit score.

Among several credit bureaus, CIBIL operates in India and is the first of its kind here. CIBIL keeps an eye on track records of past and existing loans, mortgages, cash credit accounts, credit bills, current outstanding debt, how much of credit line/limit has been utilised, and how timely the repayments of EMIs are done if there are late or missed payments and reviews your credit balance. CIBIL rating defines your credit history. Many fintech apps nowadays offer the free check of CIBIL score. It ranges between 300 to 900 — the higher the score, the better are the chances of approval of loan applications. It is better to have a score of at least more than 600.

cibil score

Lenders seek a good CIBIL score when they take loans or check their eligibility on their site or app. It helps them analyse the risk level when lending so that you are not one of the non-performing assets (NPAs) for them and measure the capacity of the borrower to repay the loan to arrive at a landing decision of the suitable loan amount and rate of interest offerings.

While CIBIL records help creditors manage effectively, it is also a tool for managing your financial health. You will develop a discipline to maintain a healthy score, obtain financial literacy, and have the right mix of loans, investments, and savings. To have a good CIBIL score, you can assure that you:

  • Pay monthly instalments on time
  • Choose longer tenure for loans with less instalment amount to avoid the financial burden
  • Make pre-payments if possible
  • Use credit card smartly by not getting into a debt trap by overusing the limits if you are unable to repay
  • Try not to borrow or take a new loan when you already have an existing one
  • If you have more than one loan or credit bills, try to have debt consolidation and pay at one place to avoid confusion and missing out on any

How to check CIBIL score

You can check your CIBIL score on the official site of CIBIL, as well as websites/apps of banks and fintech organisations such as PaisabazaarBajajFinservBankbazaar, et cetera. All you need to do is fill in a few details like name, PAN card number, net salary or so.

cibil score

CIBIL score vs CIBIL rank

This must be borne in mind that both CIBIL Ranks and CIBIL Scores are completely two different things. CIBIL score is a three-digit numeric summary of your credit report and is meant for individuals. On the other hand, CIBIL Rank is for companies with credit exposure between Rs 10 lacs and 50 crores and is a numeric summary of company credit report ranking between 1-10. While a better CIBIL score assures higher chances of loan approvals for individuals; CIBIL Ranks, the closer the rank to 1, has better the chances of securing business loans.

All images: Courtesy Shutterstock

Yashi Das

Yashi Das is a writing enthusiast & a social media lover who currently elucidates Investment & Personal Finance topics and likes to share her personal views on trending issues.