How can I see my credit track record in CIBIL?

The 3 digit numeric summary of the entire credit history of a person is known as the credit score or CIBIL score in India. The credit score is calculated based on the information recorded in a person’s Credit Information Report and ranges normally between 300 and 900.

Why it is important to know your CIBIL score?

A person’s CIBIL score plays a major role in the application and approval procedure of all types of loans. If your CIBIL score is not satisfactory, you will not be considered eligible for most loans. Once you fill out and submit your loan application form, the bank will first look at your credit score and credit report. If your credit history is not good and you have a low credit score then the bank can reject your application outright. The higher the CIBIL score, the better are your chances of getting a loan approval. However, CIBIL as an institution does not play any role in the approval of your loan as the authority to make this decision lies solely with the bank.

What can affect your CIBIL score?

• Making late payments on credit cards or delaying/defaulting EMIs on a regular basis can have a negative impact on your credit score as it indicates that you are not serious about clearing your existing debts

• Increased credit limit on your current credit card can also have a negative impact on your CIBIL score because it is considered as an enhancement of your repayment burden. However, if you spend more on your credit card it does not impact your score as long as you spend within the credit limit

• High percentage of unsecured loans like personal loans and credit cards can affect your credit score in a negative manner

• Multiple loans and credit cards and new accounts also negatively impact your CIBIL score and banks will tend to review your loan application more minutely

How you can find your CIBIL score?

It is possible to check your CIBIL score online. On the official website of CIBIL you can get an online score request form which you need to fill out and submit. The entire process is quite convenient and easy and takes only a few minutes and a nominal fee. The online form will require your personal details like name, date of birth, phone number, address, income, identity proof and address proof. 

Once you fill out these details and click on submit, you will be taken to a page where there is an option to make payment. The fee for a credit report is Rs. 470 and you can make the payment either with your credit card, debit card or through net banking. After making the payment, you will be required to submit a few authentication details. Once the authentication is completed successfully, you will get your CIBIL score within 24 hours through email. As you can see it is a simple process and you can repeat it every few days and doing so is advisable because if you find that your score is low, you can take steps to improve it. 

People who are not very internet savvy or do not have access to the internet, have the option of sending a printed application to CIBIL along with a CIBIL transaction ID and copies of your ID and address proofs. When they receive this application, CIBIL will verify it and send you a printed copy of your credit report to the address mentioned in your address proof. It is also recommended that you obtain your credit score and report personally rather than going through a financial institution because enquiries from banks and other lenders can also have a negative impact on your credit score.

How is a personal loan granted based on the CIBIL score?

If you are asking for personal loan, it means you are desperate to make certain things happen. It can be for a home renovation, for taking care of medical expenses or for marriage. Personal loan is approved very quickly and thus is the best thing you can have at the time of emergency. However, there are certain criteria for the bank to approve the personal loan. One of them is the CIBIL score which is very important for a bank to process the loan. Before you know how it affects the loan it is important to know what CIBIL score is.

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What is a CIBIL score?

The credit information of every individual is stored with Credit Information Bureau (India) Limited which provide a score. This score is dependent on the previous loans that you have taken and all your records in the past. This credit information bureau is licensed by RBI and they operate not only for individual for companies too. They keep all sorts of credit records and the amount of credit you have taken.

The company was founded in 2000 and since then it has been helping people with loan processing. The payment of credit card and other loans, such as personal loan and home loan is kept into account. If you miss a loan payment, your CIBIL score will go down and it will be difficult for you to get a loan. The CIBIL score is generally between 300 and 900 and a good CIBIL score is 750 or above. However, it is possible to get a loan when your CIBIL score is 700 but that is also on the discretion of the bank. A bad score means you have failed in making the payments on time and the bank does not consider you to be a trusted for any loan in the future. If you keep on making the payment, your CIBIL score will keep on increasing and after certain point of time, you may again become eligible for the loan. 

How personal loan is dependent on the CIBIL score?

CIBIL score is the first impression that the bank gets about the customer. The bank will first check the score and then offer you loan. The CIBIL score does not only depend on the payment history but it also depends on the amount of credit you have used. If you have used up all your credit limit, it means your burden is quite high and the possibility of your score going down is more. While approving the personal loan, the bank will check it for sure.

The CIBIL score will be high if you mix secured and unsecured loans compared to only unsecured loans which will imply that your burden is high and you don’t have a definite time to pay the loan. If you have recently opened a number of loan accounts and have taken many loans, the bank will be more cautious before approving your loan. This is quite definite as the bank would not want to be trapped.

CIBIL score is something that cannot be deleted but can be changed. If you don’t have any credit record in the past then you don’t have any credit score what so ever. You can change the score with your payment activities for a few months. So, if you are thinking of taking personal loan in future you shall be ready for the same. As personal loans are not always planned it is always better to keep your score higher by paying regular dues. It does not harm to pay dues regularly as that keeps your burden low. At the same time, you are already ready for a new loan. 

How Personal Loan EMI Payments Affect Your Credit Score?

In India, personal loans are very popular as it helps people get over the temporary or an urgent need of cash. However, personal loan attracts some of the highest rate of interests that ranges from 15 to 20 percent across banks. To pay the loan debts, full or part payment is done by the customer. Both have a significant impact on your credit score.

Prepayment of an ongoing personal loan will close your loan account, which will shore up your credit score. On the other hand, part payment of a loan, if done sincerely will reduce your total loan burden and has no effect on your credit rating. But, if you miss your EMI’s, you’ll have to pay a penalty on the interest rate charged to you and your credit score will drop significantly. Let’s try and understand what actually a credit score is and how personal loan EMI payments can affect your credit score.

What is a credit Score?

A credit score is a 3 number that sums up your financial history prepared by the CIBIL (Credit Information Bureau, India Limited) by accessing your secured and unsecured loans or credit cards information in the past. This information is provided to CIBIL by various financial institutions on the monthly basis. Mainly, the credit score ranges between 300 and 900. The exact minimum score limit tends to vary from one lender to another, most banks seems to be favorable towards those with a credit score above 750.

How can one build a good credit score?

To build a good credit score, one must

1. Pay all the outstanding dues and EMI’s on time
2. Review credit report regularly to check the status of payment on the report. Sometimes your credit report may contain false information due to delayed information provided to CIBIL. This may adversely affect your credit score. So, it is always advisable to check your credit report for any such errors in the gap of every 6 months.
3. Do not apply for more loans or credit cards until the previous debts are paid off efficiently and your credit score is improved
4. Monitor dues every month and streamline expenses to avoid delay of EMI’s or credit card bill payments.

Importance of a good credit score

A good credit score indicates that you are maintaining your personal loan and credit card payments efficiently. Besides, you may also get following benefits:

1. A person with a good credit score can easily get a home loan or personal loan approval from the banks.
2. Anyone with poor credit score may get the loan but on higher interest rates that would translate to higher EMI’s. This is not the case with individuals having good credit score.
3. A credit score is used to determine whether you are eligible for the new credit card or loan to finance your education, buy a new home/car, or even to start a new business.

How personal loan EMI affect your Credit score?

Having multiple home loans, personal loan, and other loans may cause your credit score to decline significantly and in such a case you will be charged a higher personal loan interest rate. Because this indicates the high debt you already have. Usually lenders determine your DTI (debt to income) ratio prior to approving your loan and if yours shows that you are currently overloaded with debt, they will not consider you worthy of further credit as they will think that you are incapable of successfully repaying more EMI’s. However, it is not just multiple loans and credit cards that badly affect your credit score, it is only the unpaid debt on them that really counts against you.