CIBIL Score is a 3-digit numeric summary of an individual’s credit history, rating, and report, and ranges from 300 to 900. The closer an individual’s score is to 900, the better that individual’s credit rating is.
CIBIL score determines creditworthiness and tells the lender how likely one can repay the loan on time. A high score indicates a lesser likelihood of loan default, while a low score suggests credit-risky behaviour.
CIBIL stands for Credit Information Bureau India Limited. This is a credit information company engaged in the maintenance of records of all credit-related activities of individuals and organizations. The Credit Information Bureau India Limited is the most popular of the four credit information companies licensed by the Reserve Bank of India.
There are three other companies also licensed by the RBI to function as credit information companies. They are Experian, Equifax, and High-mark. However, the most popular credit score in India is the CIBIL score. CIBIL Limited maintains credit files on 600 million individuals and 32 million businesses.
A credit history is a record of a borrower’s repayment of debts. A credit report is a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. A borrower’s credit score is the result of a mathematical algorithm applied to credit information to predict how credit-worthy one is.
How To Improve Cibil Score?
- Clear Existing Debt
Having outstanding debt is noted in the CIBIL report, and not repaying will negatively impact your CIBIL credit score. Therefore, it’s essential outstanding debts are cleared to boost the score. - Pay EMIs Timely
Making EMI payments isn’t enough. The non-payment of EMI on time will decrease credit score. Delayed EMI payments are noted in your CIBIL report and include details of the number of days of delay. - Limit Credit Usage
Utilizing too much credit shows lenders that the individual has significantly less income. Therefore, while utilizing credit, it is crucial to stay below the limit. It is also important that repayment-worthy credit should be borrowed. - Report Discrepancies
Occasionally, there may be discrepancies in credit reports. So, a good practice is to check credit score regularly and have any possible discrepancies corrected at the earliest. - Avoid Being Guarantor
Serving as a guarantor can be risky, as the primary borrower’s default will adversely affect credit score. Therefore, It’s advisable to agree to such arrangements only on certainty of the borrower’s financial stability and repayment capacity.
ALSO READ: Gold Price Today: 24-Carat and 22-Carat Prices Rise! – Check Rates In Chennai, Bengaluru & More
