CIBIL stands for Credit Information Bureau India Ltd. It is the agency in India that provides credit reports and scored for individuals and businesses. CIBIL is like any credit bureau in different countries and shares credit reports, called credit information reports (CIR) for individuals. These credit reports reflect the credit worthiness of the individuals and help the banks make decisions on loan applications.
CIBIL was started in the year 2000 as the first Indian credit agency. India did not have a credit rating agency before 1999 and that was preventing the expansion of credit in the economy. With CIBIL starting operations as a credit agency for India provided the opportunity for Banks to reduce their Non-performing assets and for customers to have more customised loan offering based on their credit rating.
CIBIL has two technical partners TransUnion International and Dun and Bradstreet, both of which are leading global credit agencies. TransUnion is the largest shareholder in the company, with 55% ownership of the company, ICICI Bank and SBI, each own 10% of the company; IOB, BOI, UTI HSBC, BOB own 5% each.
Credit reports, in this case the CIBIL reports, help the financial institutions and banks understand the credit history of an individual and predict his credit worthiness by primarily going through the borrowing history and how the person has replayed his previous loans.
However they not only help the banks but also help you in the following ways:
The CIBIL credit report is a detailed report that lists all your previous credit transactions, including both the borrowing and repayment history. The CIBIL score on the other hand is the statistical score that is generated by the credit agency after analysing the details in your report. This score signifies your credit worthiness in a nutshell to the creditors and is between the ranges of 300 to 900. A high credit score comes with a lot of advantages as that signals to the creditors that you are a great customer. Therefore it is in your benefit to ensure that you have and retain a good credit score.
The CIBIL credit report is known as the credit information report ( CIR) and contains the details of the credit history of the individuals and the credit rating provided by CIBIL know as as the CIBIL Score. Most of the credit institutions such as banks will go through this report and score prior to processing any loan or credit card application.
The CIBIL credit report ( CIR) has the following details in it :
This shows all the loans you have taken in the past and the ones that are still to be repaid. This section is used by the banks to understand how much money you owe and do you have the capacity to service more debt by paying an additional EMI.
This part of the report shows your repayment history and considers both your loan and credit cards payments. It shares whether you made the payments on time or not, if not how delayed were you. The term used to track delayed payment is days past due (DPD) and reflects the number of days late you made your payment. Any 30+ days per due on your report will reflect poorly on you so avoid making late payments.
This section reflects all the current loans yet to be paid. This helps the creditor understand what you owe currently and do you have the potential to take any new credit.
When ever you apply for a loan with a bank, the bank enquires about your credit worthiness with CIBIL . This is recorded in your credit report as an enquiry. A large number of recent enquiries is viewed negatively by lenders as they feel that you are in a desperate need of money and negatively affects your chances for approval. Therefore be sure before you apply for any loan or credit card with a bank and do not apply to all the banks.
In this section, you can see recent loans or credit cards that you have got. This tells the lenders if you have been accumulating credit recently and the banks might view a lot of recent credit approvals negatively.
CIBIL is a credit reporting agency incorporated in the in the year 2000. It launched its first product in year 2007. In 2016 TransUnion acquired 82% stake in the company.
The first CIBIL Score was launched in the year 2007. It is a a risk scoring model for banks and other financial lenders. The score helps predict the loan worthiness of an individual
CIBIL scores range from 300 to 900. The lower end of the CIBIL score reflects poor credit worthiness of a person who wants a loan. The higher CIBIL score reflects better credit worthiness of the applicant.
CIBIL Scores above 750 are considered great CIBIL score. CIBIL Scores from 600 to 750 are considered good CIBIL scores but higher risk than the people with CIBIL scores above 750.
79% of all loans are given to people with higher than 750 CIBIL score. The reasons is that CIBIL scores are an indicator of an applicants credit worthiness. The higher the CIBIL Score the lower credit risk the bank would have with that applicant. Therefore banks tend to give loans to people with high CIBIL scores if they meet the other criteria set forth by the bank for the loan.
The best cibil score to get loans approved easily is above 750 or above. It applies to rest of the bureaus
CIBIL score is determined by various credit bureaus using their own proprietary algorithm, but the main elements of score composition revolve around loan and credit card repayment behavior of an individual who lent loan. You can calculate CIBIL score based on following factors:
Credit card utilization in the past.
Servicing of EMI’s of loans availed
Delay in loan repayment availed in the past. Recent non payment may affect your CIBIL score more than past ones.
CIBIL score is supported by CIBIL along with detailed CIR (Credit Information Report) on payment of Rs. 550 to CIBIL. From 1st January 2017, you can ask CIBIL or any of the other bureaus like Equifax or Highmark for free credit report copy along with score without paying any charges. However, to simulate your CIBIL score based on your past credit history; use MyMoneyKarma.com Free CIBIL Score Calculator. You can also check CIBIL score free by using PAN card
On time EMI payments of the loan.
Regular payment of credit card bills.
Paying credit card bills in full rather than paying a minimum due amount every time.
Maintaining solid financial records.
Too many forms of credit (such as unsecured personal loans) among family members.
Proper utilization of approved credit limit.
Ensuring banks and other financial institutions that you’re dealing with submit positive information to CIBIL.
Requesting and maintaining a copy personally rather than through financial institutions.
Irregularity in repaying loan amount
Half payments or consistently making minimum amounts
Record errors from banks and other financial institutions