CIBIL: Overview & Product Offerings

Credit Information Bureau (India) Limited (CIBIL) is a credit bureau or credit information company, engaged in maintaining the records of all the credit-related activities of companies as well as individuals, including credit cards and loans.

The registered member banks and several other financial institutions periodically submit their information to CIBIL. Based on the information and records provided by these institutions, CIBIL issues Credit Information Report (CIR) and credit score to applicants and financial institutions.

CIBIL is a credit information database and does partake in any kind of lending decisions. It provides data to the banks and other lenders to quickly and efficiently filter the loan applications which they receive in the course of their business.

Product offerings by CIBIL

CIBIL offers three products viz. credit score, a credit report for individuals and credit report for companies:

Credit score

A credit score refers to a 3 digit numeric value that represents the creditworthiness of an individual. The creditworthiness ranges between 300 to 900 with 900 being the highest and 300 being the least. This score is computed with the help of the credit history of an individual.

Banks and most financial institutions prefer extending credit to an individual whose score is 750 and more. Individuals with good credit scores are less likely to default on their loan payments.

Credit report

The credit report contains the credit information that CIBIL fetches from various financial institutions. This detailed report contains information about an individual’s history of borrowing and repayment routine, including defaults and delays.

The important parts of this report are credit Score, individual’s personal information, employment details, contact information and account details.

Credit report for companies

Credit report for companies constitutes details about a company’s credit history. The several segments in a company credit report speak about potential lenders, existing credit which the company has, any pending lawsuits and outstanding amount.

A good credit report is essential for approval of any loans, whereas a bad report could damage/reduce the chances of the loan being granted to the company.

Factors influencing a CIBIL score

Repayment History

Your CIBIL score would tell the loan providers if you are capable of dealing with the debt burden and whether you can repay the loan obligation. A repayment history with EMI defaults or late payments could negatively affect your credit score.

Credit Utilisation Ratio
 

This is another key factor that could impact your CIBIL score. Credit utilization ratio refers to the total amount of credit that you use against the total amount of credit that you’ve been authorized.

Financial experts suggest that individuals should try and keep the credit utilization ratio in the range of 25-30 % for maintaining a good CIBIL score report.

Excess Personal Loans/Credit Cards
 

Credit cards and personal loans both are unsecured loans. Too many credit cards and a high amount of personal loans with no secured loans such as an auto loan or home loan could have a negative impact on your CIBIL score.

So, if you have a balance of both the secured as well as unsecured loans, it might lead to a positive impact on the CIBIL score.

New Accounts

An increase in the number of credit cards and loans sanctioned to you imply a rise in your debt burden. In case numerous credit cards and loans are sanctioned over a short time period, your credit score would be negatively affected.

Building and preserving a good CIBIL score isn’t rocket science, however, people tend to mess up their credit usage which does substantial harm to CIBIL scores. If you’re mindful of your own physical health and do everything for keeping yourself healthy, maintain a financial discipline and you would find that your financial health is healthy too.

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