When it comes to borrowing, CIBIL score and CIBIL report are the two most common elements an individual might come across. To seek quick loan approval, these elements play a crucial role by depicting your overall creditworthiness.
However similar these elements might seem, there is a thin line of difference between them which confuses many prospective borrowers.
Read through the following sections to know what a CIBIL score and CIBIL report are and how they differ from each other.
A CIBIL credit report, offered by TransUnion CIBIL, one of the leading credit bureaus in India, is a comprehensive summary of an individual’s credit information, past loans and other personal information.
To generate the CIBIL credit report, credit bureaus partner with banks and financial institutions to gather relevant information.
A credit report can have the following information:
Your personal information as supplied by you; and
A summary of your credit account. This is the most important part of your report because it compares your entire credit history.
The report also includes information on your current balance, loan amounts settled, and secured and unsettled amounts.
You will also find all hard and soft credit enquiries against your report that you had made over the years.
All non-credit inquiries you made in the last 7, 30, 90, and 180 days are included in the report.
In this report, Experian also computes a summary of your credit score.
In simple terms, a credit report is a summary of your entire credit behaviour, including your credit history.
A CIBIL credit score is a three-digit numerical representation of a person's credit history from their CIBIL credit report. The CIBIL score is between 300 and 900. When a person's CIBIL Score approaches 900, the likelihood of their credit card or loan applications approval increases. Most lenders consider a credit score of 750 or above as good.
Add Table of Difference
The table below illustrates the differences between a CIBIL report and CIBIL score:
The CIBIL report contains detailed information regarding a person’s financial history. Credit score is calculated based on the data in the CIBIL report
The CIBIL score is a three-digit number that shows how well an individual has managed past and ongoing loans. This score helps lenders determine whether an applicant is reliable or not.
There might be instances where a lender will not ask for the CIBIl report. They might just check the credit score and sanction the credit application.
Almost every financial institution checks this score before sanctioning any form of credit. They do so in order to establish the creditworthiness of the applicant.
Your CIBIL score is calculated considering a wide range of factors. Here are a few of them:
Missing a payment due date or defaulting on a loan will have a significant impact on your CIBIL score. On the other hand, regular repayments demonstrate that you are a responsible borrower who can efficiently manage personal finances. When you fail to repay on time, your credibility as a borrower declines, taking away a few points from your CIBIL score.
Lenders and banks will be more likely to approve your loan or credit card application if they see that you are capable of managing multiple types of credit. If you have a proper Credit Mix of secured and unsecured loan, the lender will be assured that you can manage different types of credit at the same time. Having a diverse credit mix on your CIBIL credit report will also help it grow over time.
The credit utilisation ratio depicts how much you spend in relation to the credit limit assigned to you. If this is greater than 30%, your loan application may be denied. A high credit utilisation ratio indicates that you require debt, which can lower your CIBIL credit score.
This is yet another factor that can affect your CIBIL score. The debt-to-income ratio is calculated by dividing your expenses, including debts, by your income. If your debt exceeds your income, your CIBIL credit score will suffer. To help improve your credit score, you must try to keep the ratio as low as possible.
Although boosting the CIBIL score is a continuous process that requires time, there are a few helpful tips that can help you maintain a good credit score with ease. Find the tips below:
Check your credit report on a regular basis to ensure that it is up to date and accurately reflects your circumstances, as errors can harm your credit score. Check credit accounts where you have been a guarantor or are a joint account holder, in particular, to ensure proper repayment activity.
To ensure that you maintain a good credit score, regular payment of dues is crucial. This displays that you are a responsible borrower and won’t default on repayments. As a result, your credit score goes up.
Your credit utilisation limit also has a significant effect on your CIBIL score. You must try to restrict your credit usage as per the prescribed limit to boost your credit score. One way of doing this is by contacting your lender and customising your credit limit.
One of the simplest ways to boost your CIBIL score is by opting for longer loan tenure. As a rule of thumb, note that longer loan tenure reduces the EMIs, and vice versa. This will help you make your repayments on time, as your EMI burden decreases.
Applying for too many credits at the same time portrays you as a credit hungry borrower. This can negatively impact your credit report, and thus lower your CIBIL score significantly.
Both are important, as your CIBIL score depends on the credit report. Thus, you should strive towards maintaining healthy credit behaviour to boost your credit score.
A score of more than 750 is considered healthy by most banks and financial institutions.
If your credit report shows a score of 1, it means that there is no information available for the an individual’s credit history.
You can simply visit the TransUnion CIBIL website and click on “Get your Free Report” to get your credit report online.