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What is a Credit Score

Credit score or CIBIL score is a three-digit number ranges between 300 and 900 that represents your creditworthiness, i.e. the likelihood of you returning the borrowed money on time. Whenever you apply for a loan or a credit card, the very first thing the lender/card issuer is going to look at is your credit score. Credit reporting agencies, also known as credit bureaus, maintain the credit records or credit reports of all borrowers in the country. The credit score of an individual is calculated basis the data in their credit information report.

 

TransUnion CIBIL, formerly CIBIL, is the oldest and the most reliable credit bureau in India. The credit score assigned to a borrower by CIBIL is known as the CIBIL score. Since most banks/NBFCs in India rely on the credit scores assigned by CIBIL, credit score and CIBIL score are often used synonymously. When it comes to credit scores, the higher it is, the better are your chances of receiving a loan or credit offering at affordable rates.

Who Computes Credit Scores in India

Credit bureaus authorised by the RBI collate the credit history of borrowers from the various banks/NBFCs in India to calculate the credit score of borrowers (both individuals and businesses).

As of now, there are chiefly four credit bureaus in the country: TransUnion CIBIL, Experian, Equifax, and CRIF Highmark. These credit bureaus collect the credit data of all individual and business entities from various financial institutions such as banks and NBFCs and prepare a credit information report (or simply credit report) for each borrower. Based on this report, the credit bureau assigns a credit score to the borrower.

 

Note: If you have never borrowed credit, you will not have a credit score.

How to Check CIBIL Score

  • Step 1: Visit the official Bajaj MARKETS website and click on “Check CIBIL Score”.

  • Step 2: Enter the required personal details in the designated fields on the following page and click on “Get OTP”.

  • Step 3: You will receive an OTP on your mobile number; enter the same on the next page when prompted.

  • Step 4: Once all your details are verified, you will be able to view your detailed financial health report along with your CIBIL score.

How is Credit Score Calculated

All credit bureaus, including CIBIL, consider a number of factors while calculating the credit score of a borrower. Since your credit score is supposed to be a measure of your creditworthiness, anything that indicates your financial behaviour and financial health has an impact on your credit score. Some of the factors that affect your credit score are:

  • Financial Punctuality: It is the most important factor taken into account while calculating your credit score. Timely payment of loan EMIs and credit card bills has an affirmative effect on your credit score while delaying payments affects your score adversely.

  • Frequency of Credit Enquiries: Whenever you apply for a loan/credit card, the lender/card issuer places a credit score enquiry with CIBIL. Frequent credit score enquiries by banks/NBFCs have a negative impact on your credit score.

  • Credit Utilisation Ratio: It is the fraction of the line of credit (credit limit for credit cards) used by you in a given month. It is suggested that you do not utilise more than 30% of your credit card’s credit limit for a healthy credit score.

  • Ratio of Secured/Unsecured Loans: Having a healthy ratio of secured and unsecured loans in your credit report has a positive impact on your credit score. It shows your ability to handle both types of loans.

  • Length of Credit History: A longer credit history implies more creditworthiness as it shows that you have taken and successfully repaid loans in the past.

CIBIL Score Range and its Meaning

As mentioned above, the CIBIL score of an individual is a three-digit number between 300 and 900, where the higher the credit score, the higher is their creditworthiness. You can refer to the following table to get an idea of how banks and NBFCs interpret your CIBIL score:

CIBIL Score Range

Rating

Meaning

NIL

Not Applicable

If you have never availed a loan or have never applied for a credit card, your credit score remains NIL. It means you do not have a credit history.

350-549

Poor

A credit score in this range is considered poor. It is an indicator of poor credit history or recurrent default on loans or credit card bill payments.

550-699

Average

A credit score in this range is considered average. You need to improve your CIBIL score to get better loan offers since many lenders would not be willing to grant a loan to someone with a credit score in this range.

700-749

Good

This is a good credit score and reflects fairly healthy financial habits. You might be eligible for most loan products/credit cards if your CIBIL score falls in this range.

750-900

Excellent

A CIBIL score in this range is considered excellent and shows that you are a low-risk borrower. Lenders offer the best deals to applicants with a CIBIL credit score above 750.

You can check in detail about CIBIL Score Ranges

Why Check Credit Score on Bajaj MARKETS

There are many advantages that you enjoy if you choose to check your CIBIL score online on Bajaj MARKETS:

  • Free Credit Score and Report: You can not only check your CIBIL score for free but can also download a free Credit Health Report from the Bajaj MARKETS website.
  • Simplified Reporting: Bajaj MARKETS simplifies your credit report. The Credit Health Report provided by Bajaj MARKETS in association with CIBIL is easily understandable even if you are not well-versed with the technicalities.
  • Make Informed Decisions: The Credit Health Report that you download from Bajaj MARKETS includes your CIBIL score as well as your past credit behaviour. This report will increase your awareness about your spending patterns and help you make informed decisions in the future.
  • Trusted Companion: With secure transactions and years of trust, happy customers across India have chosen Bajaj MARKETS as their trusted financial partner.

Details Required to Check Credit Score

In order to check CIBIL score, you would need to provide some basic details such as:

  • Your full name

  • Mobile number

  • Email Address

  • Date of birth

  • Residential address

  • Type of employment (salaried, self-employed, etc.)

  • Monthly income (for salaried individuals); Annual turnover (for self-employed individuals)

  • Permanent Account Number (PAN)

Factors that Hurt Your Credit Score

Since the CIBIL score reflects your financial well-being and creditworthiness, any financially irresponsible behaviour on your part would have a negative impact on it. Some of the bad financial habits that affect your CIBIL score negatively are:

  • Not paying loan EMIs or credit card bills on time

  • Frequently applying for too many credit cards or loans

  • Exhausting the entire credit limit on your credit card

  • Having either only secured or only unsecured loans in your credit profile

  • Not having a lengthy credit history

How to Improve Your Credit Score

Now that you are aware of the factors that have a negative impact on your credit score, it is easy to understand how you can improve the same. Following are some of the financial habits that you can incorporate to improve your CIBIL score

  • Pay Your Dues on Time: This is the single-most important financial habit to incorporate for a healthy credit score. You must be punctual with regard to the repayment of loans and credit card bills.

  • Regularly Review Your Credit Reports: It is advisable to keep tabs on your active and closed loan accounts and have a good understanding of your credit report. In case you notice any error or discrepancy in said report, you must flag the same to CIBIL immediately.

  • Avoid Frequent Loan/Credit Card Applications: Whenever you apply for a loan/credit card, the bank/NBFC requests your credit report and credit score from CIBIL. Such requests are known as hard enquiries and have a negative impact on your CIBIL score. It is, therefore, advisable not to apply for too many credit cards or loans within a short period of time.

(Note: If you check CIBIL score through Bajaj MARKETS, it counts as a soft enquiry and has no negative impact on your credit report. Hence, we recommend that you check CIBIL score via Bajaj MARKETS.)

  • Maintain Low Credit Utilisation: You should avoid exhausting the entire credit limit of your card as it reflects poor financial behaviour. Experts suggest that you should ideally not exceed 30% utilisation of your card’s credit limit.

  • Have a Good Mix of Secured/Unsecured Loans: A healthy mix of both secured and unsecured loans in your credit profile shows that you have the experience of handling both types of loans and are, hence, more creditworthy. Personal loans and credit cards are unsecured in nature, while home loans are secured in nature.

Benefits of Having a Good Credit Score

Having a healthy credit profile and a high credit score is always beneficial for a borrower in multiple ways:

  • Eligibility for More Loans/Credit Cards: The biggest advantage of having a high credit score is that it opens doors for better loan and credit card offers. Some banks/NBFCs might be even willing to offer you pre-approved loans/credit cards if you have a good credit score.

  • Lower Interest Rate on Loans: If you have a high credit score (say upwards of 750), you can bargain with the bank/NBFC for a lower interest rate on loans you wish to avail.

  • Longer Loan Tenor: Apart from lower interest rates, you can also negotiate other terms and conditions of the loan, including the loan repayment tenor, with the bank/NBFC if you have a high credit score.

List of Credit Bureaus in India

RBI has licensed four companies to operate as credit bureaus in India. These are:

  • TransUnion CIBIL: It is the oldest credit bureau in the country. CIBIL was originally established by RBI in 2000 and was later taken over by TransUnion, an American credit reporting agency and became TransUnion CIBIL.

  • Experian: It is an Ireland-based credit reporting agency. Experian started its operations in India in 2010. Apart from your CIBIL score, many lenders also refer to your Experian score before approving your loan. Moreover, unlike the other bureaus, Experian’s credit score ranges from 300 to 850.

  • Equifax: It is another US-based credit bureau operational in India since 2010. Although the company had been providing financial services in the country since 1899, it was only in 2010 that RBI licensed Equifax to operate as a credit bureau in the country.

  • CRIF Highmark: Unlike the other three credit bureaus, CRIF Highmark is an Indian credit reporting agency based in Mumbai. The company was established in 2005 and was licensed as a credit bureau in 2010.

Advantages of Analysing Your Credit Report

As mentioned earlier, your credit report contains detailed information on all your active/closed loan and credit card accounts. Hence, it is advisable to check your credit report regularly as it has multiple advantages, namely:

  • Know Your Credit Score: One obvious reason why you should check your credit report regularly is that it contains your credit score. This three-digit number is quite important as lenders consider it before approving your loan or credit card application.

  • Get Errors Rectified: At times, an error or discrepancy can find its way in your credit report. If you regularly review your credit report, you can get the errors rectified by reporting the same to the concerned credit bureau.

  • Avoid Hard Enquiries: Typically, you should apply for credit only when you are in a good credit standing so that your loan/credit card application is not rejected. Upon receiving a loan or credit card application, lenders will check your credit report in detail to understand your creditworthiness. This is known as a hard inquiry. Multiple hard inquiries in a short period will make you look credit-hungry and negatively affect your score.

  • Negotiate for Better Loan Terms and Conditions: Knowing your credit score allows you to understand your bargaining power and negotiate the terms and conditions of a loan with your bank/NBFC. If you have a high credit score, you can negotiate better terms for your loan, including lower interest rate and longer repayment tenor.

Understanding Your Credit Report

Your credit information report comprises a detailed account of your credit history. It includes information about your debt obligations (loans and credit cards) such as the repayment history, status of loans, credit mix, credit utilisation ratio, and more. While a credit report may seem like an intimidating document to read, it is, in fact, quite simple to understand with the right knowledge of the financial terms used in the report. Following are some of the sections that you will find in your credit report:

  • Personal Details: It includes your personal information such as the name, residential address, PAN, date of birth, etc. It is important to ensure that all the information listed under this section is correct as it could lead to record misrepresentation. Any kind of error must be reported to the respective credit bureau and rectified immediately.

  • Information of Accounts: This section includes information about your past and current credit accounts. You can find the complete analysis on each of your accounts with details such as the current balance, date of opening, monthly repayment history, account type, account ownership, and payment status.

  • Public Records: Under this section, you will find a detailed list of any tax liens, collection accounts, loan defaults, and bankruptcies filed.

  • Lender Enquiries: Here, you will find data about the enquiries made by financial institutions like banks and NBFCs.

Key Terms Featuring on a Credit Report

A credit report can be overwhelming for a layman as there are many terms and abbreviations that need to be understood. However, once you have the right understanding, you can easily read and interpret your credit report. The following table lists down the various terms that you may encounter on your credit report:

Term/Keyword

Meaning

NA/NH

No Activity/No History: No credit history is available with the bureau.

Amount Overdue

The amount that has not been repaid to the lender.

Credit Limit

The maximum amount that you are allowed to spend on your credit card in a given month.

Cash Limit

The maximum amount that can be withdrawn as cash using your credit card.

DPD

Days Past Due: Number of days passed since the due date of payment.

STD

Standard: The account is overdue for less than 90 days.

SUB

Substandard: The account is overdue for more than 90 days.

SMA

Special Mention: A standard account that is closely monitored for the possibility of moving towards substandard.

DBT

Doubtful: The account has remained substandard for a period of 12 months or more.

LSS

Loss: Loss has been identified on the account and is non-recoverable.

Difference Between Credit Report, Credit Score, and CIBIL Score

The following table illustrates the key differences between a credit report, credit score, and CIBIL score.

Credit Report

Credit Score

CIBIL Score

It contains the information of all your current and closed loan and credit card accounts.

It is a three-digit number assigned to a borrower by a credit bureau that indicates their creditworthiness (loan repayment capability).

The credit score assigned to a borrower by TransUnion CIBIL is known as CIBIL score. It ranges from 300 to 900, with a higher number being better.

It gives lenders an insight into your past financial behaviour in terms of loan repayment and the amount that you already owe to the various banks/NBFCs.

It gives the lender an idea of your ability to repay loan EMIs or credit card bills on time.

It is a number arrived at by CIBIL. It also indicates the likelihood of you repaying your future loans/credit card bills on time.

FAQs on Credit Score

1. What is a good credit score?

A credit score of 750 or above is considered good and makes you eligible for most loans and credit card offers at affordable/negotiable terms and conditions.

2. Is checking credit score on third-party websites safe?

It is absolutely safe to check credit score on Bajaj MARKETS. Also, since it will be considered a soft credit enquiry, checking your credit score or accessing your credit report through Bajaj MARKETS will not have any negative impact on it.

3. Why is a PAN card needed to check credit score?

Your credit score is calculated based on the financial history in your credit report, which includes all your active and closed loan and credit card accounts. Since all your loan accounts and credit cards are mapped to your PAN, your credit report is also mapped with your PAN. Therefore, it is mandatory to provide a PAN to check credit score.

4. Why do lenders check credit score?

Lenders check your credit score to evaluate your creditworthiness, based on which, your eligibility for a particular loan or credit card is determined. Many times, the terms and conditions of the loan also depend upon your credit score.

5. Can everyone access my CIBIL Score?

Apart from you, only bank/NBFCs and credit card issuers can access your CIBIL score and credit report. No unauthorised individual/organisation is allowed to access your CIBIL score.

6. Is there any limit to accessing my credit report?

No, you can access your credit report as many times as you want. We recommend that you access your credit report and check your credit score through Bajaj MARKETS as it counts as a soft enquiry and does not hurt your credit score. 

7. Why does credit score fluctuate?

Your credit score can fluctuate for a number of reasons including timely/late loan repayment, number of hard enquiries, number of active loans, etc.

8. Do frequent credit score enquiries affect my credit score?

Yes, frequent credit score enquiries by banks/NBFCs do have a negative impact on your credit score. Such inquiries are called hard inquiries. However, when you check your credit score through Bajaj MARKETS, it is considered a soft enquiry and has no effect on your credit score.  

9. Will signing as a co-guarantor on a loan application impact my CIBIL score?

If the borrower defaults on the loan for which you are a co-guarantor, your credit score will indeed get negatively affected.

10. How long does it take to build a CIBIL score of 750+?

If you stick to good financial habits, it should not take more than a few months (6 to 12 months usually) to get to a CIBIL score of 750+.

11. How often are credit reports updated?

CIBIL updates the credit report and the CIBIL score of the borrowers every 30-45 days.

12. Is it possible to delete information from a credit report?

No, it is not possible to delete any information from your credit report if it is correct. However, if you notice any error or discrepancy, you can ask the respective credit bureau for a rectification.

Latest CIBIL Score News

Women emerging as strong borrower class, better credit profile, lower delinquency rates: TransUnion CIBIL

Studies conducted by CRIF HighMark and TransUnion CIBIL reveal that Indian women are fast surfacing as a credible class of borrowers, boasting of improved credit profiles and lesser rates of attrition. This trend has been consistent among women in both urban pockets and the rural hinterlands– a positive sign for all to acknowledge.

What’s more, over the last five years, the market composition of women borrowers has risen sharply at a 19% compound annual growth rate – in comparison to the male equivalent of the statistic pegged at just 14%. To further fuel this argument, statistics reveal that women borrowers in India grew by 11% in 2021 alone, while male borrowers grew only by 6%.

When we analyse credit penetration, the statistic for women as a percentage of borrowers rose significantly, from 6% in 2016 to 12% in 2021. Over the course of the year, women seem to have opted for loans in 3 categories - consumer durables, gold, and personal loans.

The studies suggest that women in India also boast of an improved score distribution, with 53% having a ‘prime score’ (between 731 and 770), while the share of male borrowers for the same lay at just 47%. The attrition rate is also lower among women (5.2%) than men (6.9%).

The studies reveal that women are also increasingly availing home loans, business loans, auto loans, and personal loans, with their share in new-to-credit loans rising to 21.2% in 2021.

-Mar 08,2022

TransUnion CIBIL will give first-time applicants a credit score

TransUnion CIBIL will now be able to assist lenders in determining the creditworthiness of new-to-credit (NTC) borrowers who never got the opportunity to utilize a bank or financial institution for a loan or credit card. The new service includes an algorithm that employs an adaptive machine learning system to monitor the behaviour of related data subjects over time. This, according to CIBIL, would make it easier for first-time borrowers to obtain credit.

According to their report, new-to-credit (NTC) customers can be good borrowers and form a valuable customer base for credit institutions if given credit opportunities. Institutions can dramatically scale profitable growth by tapping into the NTC market by using the NTC Score. According to the report, two-wheeler loans receive the most applications from this category, followed by consumer durables and home loans. Retail credit demand in February of this year was 91 percent of what it was in February 2020, according to CIBIL, and was slightly higher than the low levels seen in the early months of the pandemic.

Every year, 100 million first-time borrowers are expected to apply for loans, according to CIBIL

The lenders are usually reluctant to lend to someone who is applying for the first time. The reason is that the credit history of such borrowers makes it difficult for creditors to evaluate them. Credit offices have solutions to this problem, like comparing a new-to-credit (NTC) client profile with other similar profiles. According to the recent survey by TransUnion CIBIL, 100 million borrowers could be credited each year.

The survey showed that, between January 2019 and January 2021, 35% of the total transUnion CIBIL customer inquiries received from NTC customers came from people aged 26 to 35. A fourth of the inquiries were carried out by people less than 25 years of age. The majority of NTC customers took out two-wheeler lending during the same period, followed by consumer durable and home loans. The majority of the people of India are under 40 years old, and banks and financial institutions are likely to approach this demographic for their first credit or loan card.

Banks now have a new method of assessing potential credit customers

The oldest credit rating agency in India, TransUnion Cibil, has launched the eligibility score for those who never took out or used a credit card and have no credit history. CreditVision NTC (new to credit) Score, a Transunion CIBIL credit scoring solution, will allow credit institutions to measure the eligibility of customers who have never bought a bank's or financial institution's loan or credit card. Using the CreditVision NTC Score, the risk associated with the first-time borrower could be reliably evaluated by financial institutions to provide them with quick and effective access to funding across the country.

The majority of new credit clients look for two-wheeler loans, with consumer durable lending, and household lending, according to a survey of the number of new inquiries made to credit customers between January 2019 and January 2021. The credit industry in India in the last decade has changed dramatically, with more new borrowers getting loans from institutions. The innovations and tactics of the TransUnion CIBIL have helped crores of creditors open their credit accounts in the last two decades.