Banks and NBFCs use these reports of individuals, provided by CIBIL, to assess an applicant’s credit history. They use this data to decide if the applicant is liable for the credit or loan he/she has requested. This proves that CIBIL is an important element of India’s financial system. Known to be India’s oldest Credit Information Company (CIC), as per the latest records, CIBIL is connected with over 2600 institutions, including public and private sector banks, financial institutions, housing finance, and non-banking financial companies (NBFCs). In 2017, CIBIL launched its MSME (Micro, Small, and Medium Enterprise) rank system. This ranking system helped the lenders analyze and list down the loan requests from applicants. Primarily, the CIBIL score is helping the financial institutions to reduce lending risks and the number of bad loans. As per the current Reserve Bank of India (RBI) guidelines, the effective interest rate that will be charged on loan taken by the borrower will be calculated as follows: External Benchmark Rate + Spread (Margin) charged by bank + Risk Premium The criteria based on which banks assess and determine the risk are varied. Some banks have their own setups for assessment, while others consider the credit score of the borrower.
How to Check Your CIBIL Score For Free
How to Check Your CIBIL Score For Free
The Process
There are some Credit Bureaus present in the market right now like, TransUnion CIBIL, Experian, Equifax, and similar. These credit bureaus help you in generating your credit score and credit report. Many bureaus charge money to keep you updated about your credit status, credit score, and other details. However, the RBI guidelines have asked the bureaus to provide credit reports and credit scores for free at least once a year. Some bureaus provide one free report and charge to keep you updated for reports all over the year, whereas others are free eternally. Therefore, you can obtain a CIBIL score and credit report for free, but only once a year.
Steps to calculate the Credit score
Step 1: Go to the ‘My Score’ page on the CIBIL website
PAN number Passport number Voter ID number Driving License Ration Card
It is recommended that you read through the terms and conditions mentioned at the bottom of the screen. After giving a thorough read to the terms and conditions, click on the checkbox ‘I accept and continue ‘, if you agree with all the terms and conditions and want to continue with the process. Step 3: Verification of your identity
CIBIL Dashboard Overview
This is the page that displays your CIBIL credit score. The CIBIL score will appear on your screen in the range of 300-900. You will also find a tab reading ‘Credit Report’ on the screen. You can also click on the tab – Credit Report to view the following information.
Factors Affecting Your Credit Score
Analysis of your Credit score
If your credit score is in the range of 750-900 It is the best CIBIL score. Banks would not hesitate to give you a loan, and they will be happy to provide you with the credit you need. They might also provide you with their best offers. If your credit score is in the range of 600-750 It is a decent CIBIL score. While banks will approve your loan and provide you with the credit you need, you might not be benefited with their best offers. If your credit score is in the range of 450-600 This comes under the category of an average CIBIL score. This score may or may not get you a loan. Even if you get a loan, you will be categorized under a high-risk borrower. You will not be supplied with offers from the bank. Moreover, the loan will be given to you with additional terms and conditions. If your credit score is in the range of 300-450 It is categorized under a fairly low and poor CIBIL score. With this score, any bank will rarely approve your loan or fulfil your credit request. Sometimes, your CIBIL score could be displayed as 0 or -1. This may surprise you, but there’s nothing to worry about. If your credit score counts out to 0, it simply means that there is absolutely no credit track for the borrower. If your credit score counts out to -1, it means that the borrower’s credit track record available is less than 6 months. If such a case arises, it is suggested to wait for some time after availing of a loan or credit card. A good credit score of 700+ will help you easily obtain loans and at cheaper rates as well.
Tips to Improve your Credit Score
CIBIL BankBazaar Myloancare Paisabazaar CreditMantri India lends
We hope this guide was helpful and you were able to check your CIBIL score for free. If you still have some queries or feedback then feel free to use the comment section to reach out.
