Planning to take a loan? Aiming for a credit card? Do you want to get the approval hassle-free with reasonable interest? You will definitely need to know your CIBIL score and ways to maximize your score.
Many banks and non-banking financial institutions provide loans and other instruments, such as credit cards, to you only after checking their CIBIL score. It is the first impression your loan provider receives about your loanworthiness. If you possess a low CIBIL, the chances of rejecting loan applications are high. Hence, the CIBIL score plays a pivotal role in maintaining your financial profile and its future.
What is the CIBIL Score?
What is the full form of CIBIL? CIBIL stands for Credit Information Bureau India Limited, a credit rating bureau that has access to information regarding your credit. CIBIL score is often used interchangeably with credit score. It is an account of your creditworthiness based on your ability to repay the loan amount timely. Though RBI permits other credit information companies to provide credit information, the latter is the most popular and widely used.
It is a three-digit indicating your financial summary, ranging between 300 and 900. The score is arrived at based on your financial transaction history, loan, and other credit payment history, etc. A score between 700 and 900 is considered the best and worthy of getting loans easily with lower interest rates.
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Benefits of CIBIL Score
- Quick approval of loans
With a high CIBIL score, the loan provider will consider you as a prospective client with faster repayment possibilities. You need not have to go in search of guarantors and multiple documents.
- Low-interest rates on credits
People with high CIBIL scores will receive loans and credits at lower interest rates, whereas people with CIBIL scores have to pay higher interest for the same amount.
- More Negotiation power
If your CIBIL score is high, you can negotiate with lenders for lower interest rates and longer repayment duration.
- Higher approval limit of loans
People with higher CIBIL scores tend to receive higher amounts of loans compared to those with lower.
- Easier and quicker approval of credit cards
Your history of timely payments indicated by your score gives trust among banks, and you can easily avail of credit cards.
- More offers with your credit card:
A higher CIBIL score makes you a lucrative market, and you will have access to higher credit and special offers and advantages.
- A reduction in loan processing fees and other costs.
- Long-term loans:
Your CIBIL score tells the bank that you will repay the amount for sure, and they will not worry about giving you money with long-term payback options.
- Insurance Premiums:
Sometimes, insurance companies check your CIBIL score to determine your health insurance or life insurance. A higher score will provide you with a lower premium payment for insurance.
- Employment Opportunities:
The companies hiring for roles with financial responsibilities may check for your CIBIL score, and a good score increases your chances of employability.
How to Check your CIBIL score?
One easy way to check your CIBIL score is at TransUnion CIBIL itself by simply providing your PAN card details. Since your PAN card is an identity card as well, and it is connected to all your tax and financial history, you can easily access your score with your PAN card.
You can check your CIBIL score here.
Apart from the official CIBIL website, you can visit your bank or other NBFC website to check your CIBIL score. If you are applying for a loan, your bank will be checking your CIBIL score free of cost from their side.
Now that you know your CIBIL score, let us see the range of the scores and their indications.
CIBIL Score Range
| Range | Indication |
| 300 – 500 | Poor |
| 550 – 650 | Average |
| 650 – 750 | Good |
| 750 – 900 | Excellent |
How do I build and maintain a good CIBIL Score?
There are no tricks to maintaining a good CIBIL score, but we can provide you with certain guidelines to follow in order to maintain a good credit score and avail higher credits easily in the future.
Always pay your loans on time.
If you are a person who forgets to pay loans, EMI and credit card bills on time, it is better to keep an electronic reminder or set up automatic payment to avoid a declining credit score.
Avoid taking too many loans at a time.
Avoid taking too many loans at a time. The number of loans you take at a time should be minimal, and try to go for more loans after repaying the current one.
Maintain the right mix of credits.
There are secured loans like home loans and vehicle loans and unsecured loans like personal loans and credit card bills. It is always better to keep a fine balance between both. Too much unsecured loans will negatively impact your credit score. Maintaining variety in your credit account will have a positive impact on your credit score.
Apply for a credit card within your limits.
You know your wants are unlimited. But don’t go for a credit card with limits beyond your reach. It will also help you to pay your bill each month. Also, lower your credit to 30% of your available limit, which is ideal. These actions will definitely reflect in your credit score.
Review Your Credit history on at least a monthly basis.
CIBIL may make a mistake while recording your credit details. Your loan repayment may not be reflected in your credit history, and it will impact your score and future loan potential. So, keeping track of your score will help you report and rectify any possible mistakes entered into your account.
Do not close your old account.
Closing your old account with a long credit history will impact your credit score negatively. As this old account reflects your repayment history for a long period, deletion of the account will also erase the history. A longer credit history is beneficial for your credit score. Hence, keeping old accounts with longer history is best to maintain a higher score.
Keep track of your co-signed loans.
If in case the borrower forgets or is unable to repay the loan amount that you have co-signed, it will impact your credit score. Hence, regularly update on the repayment status of the loan that you co-signed.
Do not open multiple accounts in a short time.
Opening multiple credit accounts in a short time period can negatively impact your creditworthiness.
Frequently Asked Questions About CIBIL Score
- How to check the CIBIL Score online?
You can check your score on the official website of CIBIL or with your bank. Many non-banking financial corporations like Bajaj Finsev, paisabazar, Paisa Wasool, etc, also provide you with your score.
- Is a PAN card mandatory for checking your score?
Your PAN card is mandatory for most big loans and credits. However, you can check your CIBIL score without a PAN card. You can use the following IDs if you do not possess a PAN card.
- Passport
- Voter ID
- Ration Card
- Driving License
- Can I check my CIBIL score with my Aadhaar card credentials?
No, you cannot check your score using your Aadhaar card.
- Is it mandatory to have a minimum CIBIL score to get a loan in India?
No. While banks will check your CIBIL score before approving your loan, it is not mandatory to possess a minimum one to get a loan approved.
- Can anyone check your CIBIL score?
The general public cannot see your credit score. However, specific groups have access to it for their functional purposes, such as lenders, banks, insurance companies, and government and utility providers.
*This blog is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice before you take any/refrain from any action.*
