CIBIL is one of the first credit information companies in India. Credit Information Bureau India Limited or CIBIL is a company responsible for maintaining the credit history of each person involved in the debt and loans market. Not only individuals, but the company also keeps records of commercial entities in the country. Credit lenders, banks, and NBFCs use these records to cross-check a prospective borrower’s background and credit habits to determine their creditworthiness.
Once you acquire a credit card or make a loan query or application, you enter close monitoring by experts. Each financial activity you make in terms of credit is recorded in your CIBIL report. Despite the monitoring, there is nothing to worry about. It works very much similar to your school report card. Good performance brings you a good score and failing to perform keeps your score down. CIBIL score ranges from 300 to 900. If you are above 725, you are considered a good debtor and responsible borrower.
The score that you get is based on your credit records and payment history. How do you use your credit cards, and to what extent? How long have you been maintaining your credit accounts? All these details are recorded in your credit report and affect your credit score. However, despite CIBIL being India’s biggest credit information company, a lot of people do not understand CIBIL score.
Here are 10 things everyone must know about the CIBIL score.
- Information Included
Your credit report does not include information about your savings and investments. It only contains details about your debt-related activities and credit history.
- Use of Credit Score
The credit score that you receive is used to determine your creditworthiness for a loan or credit instrument, to carry out a credit assessment, to know about your payment history. CIBIL may give access of your credit report to prospective lenders with prior permission that the lender is supposed to present to CIBIL. Your direct permission to CIBIL is not required here. The prospective lender will act as an agent on your behalf to check your credit report.
- No Effect of Checking Credit Score
It is a common misconception that checking credit score on a regular basis affects the credit score negatively. This is a myth. You can check your credit score any number of times without it being affected in any manner. In fact, checking it before making a loan application is a wise step, as applying for a loan with a low credit score can lead to rejection and bring your score down.
- CIBIL Maintains Records for All
There is another misconception that CIBIL highlights only bad debtors and users with a bad/ low credit score. This is not incorrect. The credit information company maintains records for every individual in the credit market, whether they have a high score or a low score.
- Access to Information is strictly controlled
If you have a low credit score or if you are a defaulter, the bureau does not publish your name and other information on a public forum or any other social platform. It gives access to your credit information only to lenders who enquire about you with prior permission from your end.
- All credit related activity is recorded in your Credit Report
Any active or inactive credit account that you have, along with your payment habits and monthly spending habits are recorded and reflected in your credit report. New enquiries or closure of old accounts is also recorded.
- No Guidance Provided by CIBIL
CIBIL does not provide any guidance or assistance in increasing your credit score. The score that you get totally depends on your repayment history and credit habits. The credit bureau cannot do anything to improve your credit score at its discretion.
- No Information About Credit Ratio
Your credit report does not contain any information about your credit ratio. It contains only the basic information about an individual’s credit. The lenders need to find other details by themselves. Also, CIBIL cannot help them in finding these credit ratio details in any way.
- No Right to Alter Your Credit Report
No one can edit, alter, or correct your credit report. It gets updated with each credit-related activity you perform. Whether you close an account, make a repayment, default on a payment, all of it is reflected in your credit report. The credit bureau officials have no authority to make any change in your credit report. However, if you notice a mistake in your credit report, you can file a dispute and get it corrected.
Don’t be swayed by myths and misconceptions. Be an informed credit holder.
Check your credit report from time to time and get any dispute corrected before it brings your credit score down. Clix Capital is a reputed NBFC that offers different types of loans to Indian borrowers, including personal loans, home loans, and business loans. If you are looking forward to applying for one, check your credit score now.
You can also reach out to us at firstname.lastname@example.org or call us at 1800 200 9898