Check Your FREE CIBIL Score

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Why Should You Check Your Credit Score?

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Get detailed analysis of your credit behaviour. Fetching your CIBIL report will not affect your credit score.

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See what powers your credit score. Our expert tips will help you improve your score.

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Exciting personalised loan offers based on your credit score.

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What Is A Credit Score, And How Does It Work?

A credit score is a number that represents how likely an individual is to repay their debts. Lenders like banks, NBFCs and credit card companies utilize this score to assess the risk of lending money or for that matter extending credit to an individual.

Credit scores are typically calculated using information from credit reports, which are compiled by accredited credit reporting agencies. In India, the primary credit bureau is the Credit Information Bureau (India) Limited (CIBIL), which collects and maintains the credit information of individuals from various sources such as banks, financial institutions, and other lenders and creates what is called a credit score report. You can easily check your CIBIL report online by submitting some basic financial details like your mobile number and PAN card number.

The credit score can range anywhere from 300 to 900, where a higher score indicates a better credit profile and higher creditworthiness. Lenders generally refer to credit reports and prefer individuals with higher credit scores as they are perceived to have a lower risk of defaulting on loans or credit.

Why is it important to maintain a good Credit Score?

A good credit score is one of the most important eligibility criteria you should fulfill to acquire a bank loan or a credit solution. Credit Information Companies (CICs) provide credit score reports for all borrowers to financial institutions. Doing a regular credit score check is important for several reasons.

  1. You can negotiate a lower interest rate with a higher credit score rating.

  2. You can get your loan application approved instantly and processed at the earliest.

  3. Your credit card application will be accepted readily. Plus, you can apply for a new credit card without any hassle.

  4. You can obtain credit cards with attractive features, rewards, and benefits

  5. Some banks can waive your pre-payment charges and processing fee if your credit score rating is good.

  6. It gives you greater financial flexibility and purchasing power.

  7. You can secure desirable rental accommodations as it demonstrates your financial responsibility and reliability.

  8. Some lenders and service providers may waive or reduce security deposits

  9. It can positively impact your employability as in certain industries, employers may review credit scores as part of their hiring process

You can build a strong financial profile by maintaining a good credit score. It demonstrates your responsible credit management and can open doors to better financial opportunities in the future.

What Is Considered A Good Credit Score?

A "good" credit score may vary slightly between lenders and credit bureaus, but generally, the following ranges can indicate creditworthiness:

  • Excellent Credit Score - Around 750 and above

    These Individuals are likely to have a high likelihood of loan approval and can access loans and credit at favourable terms, including lower interest rates.

  • Good Credit Score - In the range of 700 to 749

    This scoring range also signifies a strong credit profile, and individuals within this range are generally considered reliable borrowers by lenders.

  • Fair Credit Score - Ranges from 650 to 699

    Individuals with fair credit scores can have access to credit, but they might face slightly higher interest rates or more stringent lending conditions than those with higher scores.

  • Poor Credit Score - Below 650

    They may face challenges in obtaining credit or loans as lenders may be more cautious due to the perceived higher credit risk.

How Can The Credit Score Be Improved?

To improve your credit score in India, you should:

  • Pay your credit accounts on time.
  • Keep your credit card balances low.
  • Maintain a healthy credit utilization ratio.
  • Avoid opening too many new accounts.
  • Regularly do a CIBIL score check for errors.

Building a positive credit history over time will help increase your credit score.At IIFL Finance, you can apply for a free credit score check online and get to know where you stand. 

How Can The Credit Score Be Improved?
What are the reasons for a low credit score?

What are the reasons for a low credit score?

Several factors can contribute to a low credit score in India. Common reasons include:

  • History of late or missed payments
  • Defaults on loans or credit cards
  • High credit utilization
  • Frequent credit inquiries 
  • Too many open credit accounts 
  • A short credit history
  • Negative remarks such as settlements or bankruptcies on CIBIL reports 

What Is The Difference Between Credit Score & Credit Report?

Although credit scores and credit reports are distinct, they are interconnected. Credit reports are the starting point for computing credit scores because they provide the data needed to determine creditworthiness and produce the score.

Credit Score Credit Report
A numerical three-digit representation of creditworthiness
(e.g., 300-900 in India)
The credit or CIBIL report contains comprehensive information about
credit accounts, payment history, credit inquiries, public records, etc
Used to evaluate credit risk Used to assess creditworthiness and make lending decisions
Generated by specific scoring models Compiled and maintained by credit bureaus
Fluctuate based on recent credit activity Reflects long-term credit behavior and history
Updated frequently Updated periodically by credit bureaus

How Does CIBIL Score Impact Loan & Credit Card Eligibility?

CIBIL score is a significant factor considered by lenders when evaluating loan and credit card applications.

Increases the chances of loan approval and credit card issuances

Perceived as someone having low credit risks

Leads to more favourable loan terms and lower interest rates

Enhances eligibility, provides access to better credit opportunities

Improves overall borrowing capacity

A low CIBIL score can result in loan rejection or limited credit card options

CIBIL Score Loan FAQs

While there is no fixed minimum score applicable universally, a CIBIL score of 750 or above is generally considered a good score and increases the likelihood of loan approval. Multiple financial websites offer a CIBIL check where you cen easily get your free CIBIL score.

Lenders can make informed lending decisions, manage risks, and ensure responsible lending practices by checking the CIBIL score. It allows them to evaluate the creditworthiness of borrowers and offer loans with appropriate terms and conditions.

CIBIL (Credit Information Bureau (India) Limited) does not have the authority to delete or change credit information on its own. They can make changes to your credit report based on the investigation, but they rely on information provided by lenders and creditors. If the information is accurate and valid as per the lender’s records, it may not be altered. However, if there are genuine errors, the credit bureau will correct them based on the investigation and the lender’s response.

If you find errors on your credit report, you can contact CIBIL to report them. CIBIL has its own dispute resolution procedure, which may take some time as it involves coordination between the credit bureau, lenders, and creditors. You can expedite the resolution process by being proactive, providing accurate supporting documentation, and following up with the credit bureau.

Your PAN card records your major financial transactions. If you don’t have a PAN card, there is a high probability that you haven’t availed any credit. In such a case, any credit bureau cannot generate your credit score.

No, there is no specific limit on requesting access to your credit score in India. As an individual, you have the right to check your credit score as often as you need or prefer.

No. Your CIBIL score is private information you or a select group of authorised parties can access with your permission.

Your present lenders periodically report the status of your loans and credit cards to CIBIL, and over time, your report reflects these information. As a result, if you close a loan or credit card account this month, that information can still appear on your credit report.

Usually, becoming a guarantor doesn't affect your credit score. However, if the borrower is unable to make their payments, you will be held accountable and this will reflect negatively on your credit report and score.

You can download your CIBIL report by visiting the official website of CIBIL. Enter your basic details such as name, address, contact number, and PAN details. Verify your identity using OTP authentication by clicking the ‘Get Free Credit Report’ button.

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