Learn the Difference Between CIBIL Score and CIBIL Report
Your CIBIL Report is a comprehensive record of your credit history that includes personal data, contact information, job information, loan account, and credit card information. CIBIL Score, on the other hand, is a three-digit statistical overview of your CIBIL Report that reflects your creditworthiness. This is focused on your credit history and payment habits, which is an integral part of your profile because most creditors use your past behaviors to predict your potential behavior.
Your CIBIL score is a synopsis of the last 24 months of your credit behavior, whereas your CIBIL Report covers the previous 36 months of your credit history. Despite the variations between your CIBIL Score and Report, it’s important to remember that both play a role in your loan application’s approval, and lenders use both to determine your loan eligibility.
To be eligible for a CIBIL Score, a person must have more than six months of credit details. On the other hand, a new-to-credit customer may not have enough facts or credit history to produce a ranking. They may be given an NH/NA in this case (No History or Not Available), allowing them to develop their credit footprint over time by practicing good credit habits like timely repayments, a diverse credit mix, and remaining within their credit utilization limits.
This will ultimately result in a statistical CIBIL Score ranging from 300 to 900. The higher your credit score, the more likely your loan application will get accepted. In reality, consumers with a CIBIL Score of 750 or higher are approved for 79 percent of loans.
If you are novel to the credit world and don’t have a considerable score yet (or don’t have one greater than 750), there is no need for you to lose heart. Fortunately, some lenders might not even look at your credit score; instead would check your CIBIL report for an extensive view of your credit footmark. Here they will seek to check the date past due on your owed payment and whether or not you have any red flags on your loan accounts.
Another important consideration here is the number of inquiries set on your account because every one of these details is available in your credit report. The CIBIL Report’s information allows the creditors to determine how risky a deal they are underwriting and whether they should approve your loan application.
Furthermore, for the past couple of years, selective banks and credit lenders have come up with policies that reward credit-conscious and high-scoring customers. The banks reward such consumers with privileges on pricing loans (with discounted interest rates). So, reckon that a high CIBIL score or healthy report will ultimately allow you to access credit easily as well as will pave your way for considerable savings.
If you want to accomplish your financial goals, you must aim for a CIBIL Score equivalent or higher than 750 with a polished CIBIL Report. Regularly checking your score and report allows you to ensure that your personal and loan account information is up to date, ensuring that you have access to credit when you need it most.
Everything aforementioned gave us a fair idea that our CIBIL score is a highly vital variant. It is the first impression lenders look at while appraising any loan application. Therefore it is important to learn how to calculate the desired score. Calculating your credit score is a hefty task that requires a proper proprietary algorithm. Apart from all the statistical appraisal records, the other important element that one needs to keep in mind while calculating the score is one’s loan payment conduct.
The CIBIL score is a three-digit numeric overview of your credit history. It is calculated using information from your CIBIL report’s ‘Accounts’ and ‘Enquiries’ pages, which includes (but is not limited to) your loan accounts or credit cards, payment status, and outstanding amounts’ days past due. The score reflects your creditworthiness, as determined by lenders, based on your borrowing and repayment history. CIBIL score varies from 300 to 900, where the higher your score, the more likely you are to be accepted for a loan. In reality, consumers with a CIBIL score of more than 750 are approved for 79 percent of loans.
How is the CIBIL score calculated?
CIBIL score derives its analysis statistics from four key factors.
Payment history: If you have a habit of late payment or defaulting your installment, it marks your payment history negatively.
- Credit mix: Credit mix means that you must have a blend of secured and unsecured loans. Having a suitable combination will positively impact your credit score.
- Multiple inquiries: Multiple loan inquiries indicate that the burden of loan applications will undoubtedly burden you more in the future. Therefore, it is advised that one must keep an open mind while getting credits.
- High credit utilization: High credit utilization indicated a risk of increased debt burden, which in return would impact your score.
Things to keep in mind to achieve a reliable credit score.
The sole determinants of your CIBIL score are your credit history and past payments. These determinants certainly impact your credit score and certainly ensure whether or not you will obtain credit in the future. Here are some short pointers that will help you raise your score and build a better and healthier credit profile.
Make it a habit to pay your loans on time. Any late payment of credit installments can adversely impact your reliability.
- One must keep their balances low. Don’t avail of too much credit; instead, be judicious and control your utilization.
- Every time you get in the process, lay your mind on the credit mix. Create a blend of secured loans such as home and auto credits with unsecured loans such as personal credit cards. If you have high unsecured loans and none of them are secured, it will impact your credit score.
- Apply for credit in moderation. It means that you must not continuously seek credit; instead, give time to pay off one and then avail of the other.
- If you have co-signed or guaranteed for anyone’s credit requirements, keep a tab on the same because you, too, will be liable for their missed payment.
- Another issue which people face regularly is inaccuracy in reports. So, in order to have a big score, keep a side-eye for any discrepancy or dispute. If you do, immediately report the same and get it rectified.
CIBIL reports are a thorough analysis of a customer’s credit history received from lender and bank entities. The entire data obtained is then processed and formatted in the form of a detailed report. Read below to understand the commonly contained elements in the CIBIL report.
- Personal information: Name, address, age, sex, etc.
- Employment information and income details
- Loan details: Loan types availed of in the past, any ongoing loan, and each of theirs subsequent repayment time frame.
- Loan defaults (later payment or miss payments).
- Loan settlements.
- Details of all credit cards you own.
- Default on any credit card bills.
- Credit card cancellation.
- Number of loan/ credit inquiries.
- Lastly, your credit score.
Ideally, customers should avail of their credit report/ score synopsis once a year to ensure that all the information stated is free of discrepancies. But where to obtain a reliable credit report? If you wish to seek credit reports, the first option available here can be applying for CIBIL accounts online. The other option available here is pounding all your credit worries on a financial company like Atlanta Credit Experts. The company will help you with the best financial advice that will allow you to obtain the best credit score and ultimately get approved for funding. Navigate to Atlanta Credit Experts official website and learn all the ifs and buts of the financial world.