What is a CIBIL Score and Report? How can I improve my CIBIL Score?
CIBIL stands for Credit Information Bureau India Ltd. It is first information company in India established in August 2000. The company collects and maintains credit records of individuals as well as commercial entities. This includes borrowing and payments related to loans and credit cards.
CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIBIL Report (also known as CIR i.e Credit Information Report). A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time. A CIR does not contain details of your savings, investments or fixed deposits.
CIBIL Score has two focus areas: A Consumer Bureau that deals with consumer credit records and a Commercial Bureau that deals with the records of companies and institutions.
A Credit Report is a comprehensive document that details an individual’s or corporate’s borrowing history and repayment record. It provides potential lenders with a detailed picture of an individual (or company’s) credit-worthiness based on past and current credit behavior. It allows lenders to have quick access to accurate information when they receive new applications for credit and allows them to make a faster and transparent lending decision.
A Credit Report is a single unified document that covers your credit history across different lenders over a significant period of time. Your credit report would include the following details:
- Personal information like name, age, gender and address
- Employment details and income
- Number of hard enquiries made by potential lenders on receipt of your loan/credit card application
- Information on past and current loans along with your payment record
- Any defaults on loan
- Any ‘Settled’ loans
- Total credit limit and the amount spent monthly (Credit Utilisation Ratio)
- Any credit card payment defaults
There is no shortcut to improving your CIBIL Score. It gets improved over time.
One should have a clear understanding of the scoring pattern. It is bifurcated as follows:
- Credit Exposure: 25% weightage
- Past Performance: 30% weightage
- Credit Type & Duration: 25% weightage
- Other Factors: 20% weightage
One must follow the below stated ways for improving CIBIL Score:
- Clear the credit cards
- Use the oldest credit card
- Appeal for inaccurate judgement over your credit report
- Make equated monthly instalments on time
- Don’t max out your credit cards and try to use 30% of the credit limit
- Get a secured credit card from leading banks