How To Compare Different CIBIL Score Ranges?

India's most prestigious credit bureau is the Credit Information Bureau (India) Limited or CIBIL. The agency is responsible for providing banks and financial institutions with a person’s financial data, such as advances, credit cards, and other investments. The data collected is then used to prepare credit reports containing an individual’s CIBIL score, which financial institutions use to determine loan eligibility.

What Is A CIBIL Score?

CIBIL scores are three-digit numbers that range between 300 and 900. Each individual's CIBIL is calculated based on their credit history, which determines their creditworthiness. Calculating the CIBIL score is based on financial records for the last six months with different variables of varying weights.

How Are CIBIL Credit Reports Generated?

CIBIL considers many factors when generating a credit report.

1. Repayment History

Your repayment history is the most influential factor in generating your CIBIL credit report. Banks, lenders and NBFCs consider borrowers with poor credit histories as risky. Every loan or credit you avail is reported to CIBIL by your lender, and CIBIL receives all your repayment history for that credit.

Regular and timely payments will result in an excellent CIBIL credit report. Failure to repay your debt on time will negatively affect your CIBIL score, irrespective of a credit card or a loan.

2. Credit Utilisation Ratio

Generally, lenders won't extend loans to borrowers with credit utilisation ratios higher than 35%. This ratio plays a role in determining a loan applicant's ability to repay according to income.

When you use your credit card or any other form of credit more than you earn, your CIBIL credit report takes note of such activity. Your credit score falls when you have a high debt-to-income ratio.

3. Multiple Credit

When you apply for a loan or a credit card, your lender reviews your CIBIL credit report. The more loans you have, the lower your CIBIL credit score. Hence, you should pay off your existing loan before applying for a new one to boost your CIBIL credit score.

4. Loan Enquiries

Making repeated inquiries about loans may indicate that you are hungry for credit, negatively affecting your credit score.

5. Credit Cards

Credit card usage also affects credit scores. A high credit card balance demonstrates poor spending behaviour, creating a poor credit score for the borrower.

6. Secured v/s Unsecured Loans

The risk of a lower credit score increases if you take multiple unsecured loans. Likewise, your credit score will increase if you repay secured loans on time.

What Is CIBIL Score Range?

CIBIL scores range from 300 to 900, with 900 considered the highest. Each bank requires a different CIBIL score for various products. Banks and financial institutions consider a CIBIL score of 650 or higher ideal.

Understanding Different CIBIL Score Ranges

The different CIBIL ranges are as follows.

• NA/NH

Borrowers without a credit history will have an NA/NH score, which stands for "no history" or "not applicable". It indicates no debt or using a credit card. To establish a credit history and avail of a loan in the future, you can take a credit card.

• 300-599

CIBIL scores between 300-599 are considered poor. Borrowers who did not pay off loans and credit cards on time have credit scores between these ranges. It means you have unpaid credit card bills or EMIs.

Getting a loan or a credit card will be challenging if your CIBIL score falls in this range, as you are at high risk of defaulting.

• 550-649

Your chances of getting approved for a loan are slim if your credit score is between 550-649. A credit score in this range is considered fair, but most lenders won’t give credit to people with this score range. This range may also carry comparatively higher interest rates from financial institutions. The borrowers may have a CIBIL score in this range if they fail to pay their credit card bills and loan repayments on time.

• 650-749

This range of credit scores is considered good. Such a positive score indicates good credit behaviour to financial institutions, and a loan application may be approved quickly. Despite this, some lenders may still charge high-interest rates.

• 750-900

If the borrowers pay all their credit card dues and loans on time, their credit score ranges from 750 to 900. CIBIL scores in this range are considered excellent. An applicant with this credit score has a greater chance of getting approved for a loan at the best interest rate.

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Frequently Asked Questions

Q1. What CIBIL score do financial institutions consider a good one?
Ans. A CIBIL score over 750 is ideal and appropriate for various lending institutions.

Q2. How can you correct any mistakes in your CIBIL report?
Ans. If you find any errors in your credit report, contact CIBIL at info@cibil.com. The bureau will review your request and correct any errors.