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All About CIBIL 2.0 TransUnion Scoring Model

By Finserv MARKETS - Aug 5,2019
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CIBIL 2.0 Transunion Scoring Model

Your CIBIL score determines your creditworthiness. This three-digit score is extremely important when it comes to determining your ability to avail a Bajaj Finserv personal loan or any other financial assistance. Majority of banks and non-banking financial companies (NBFCs), determine your loan-repayment ability based on how good your CIBIL score is. Generally, a CIBIL score above 700 is a good CIBIL score.

What is New in CIBIL TransUnion Score 2.0?

CIBIL Score 2.0 has a new risk index for first-time borrowers. A major addition in the new CIBIL 2.0 model is the provision to offer credit to individuals who have no credit history. The provision will offer a lot more flexibility in availing loan facilities to many individuals. The new TransUnion CIBIL 2.0, released in October 2012, aims to provide a more efficient estimation on the creditworthiness of the loan borrower.

Features of CIBIL TransUnion Score 2.0

  • More Accurate Information
  • Better Understanding of credibility for borrowers
  • Less cases of defaulters
  • Lenders can make better decision

Let us understand it by a proper risk index table

As per the table index, borrowers with less than six months of credit history will be rated on a scale of 1 to 5. This helps lenders segregate first time borrowers into high, medium and low. A score of 5 will suggest that he/she is at the lowest risk and a score of 1 indicates that he/she is at the highest risk.

Risk Index Meaning
N/A Individuals With No Credit History

Credit Bureau has not received any credit information in the past 24 months

1 Highest Risk of Turning a Defaulter
2 High Risk of Turning a Defaulter
3 Medium Risk of Turning a Defaulter
4 Low Risk of Turning a Defaulter
5 Lowest Risk of Turning a Defaulter

Benefits of CIBIL TransUnion Score 2.0?

The new Credit TransUnion Score model is for borrowers with less than 6 months of credit history to avail personal loans by considering their ability to repay the loan amount. Earlier, borrowers with less than 6 months of credit history were assigned a zero credit score. The financial institutions would extract the credit report on the grounds of doing background credit checks and estimate the loan eligibility. With CIBIL 2.0, the entire TransUnion Scoring model has now become the benchmark for credit assurance by banks.

Impact of CIBIL 2.0 TransUnion Score on Lenders

With the latest CIBIL scoring model, lenders can ensure better decision-making towards lending a loan to certain borrowers. The model also helps chart-out refined terms and conditions first-time borrowers. The TransUnion Score improved efficiency in determining the personal loan credit score which helps lenders to make the right decision when disbursing the loan amount to worthy candidates.

Impact of CIBIL 2.0 TransUnion Score on Borrowers

Today, there is a relaxation on the credit score eligibility for availing a personal loan due to CIBIL 2.0 TransUnion Score. However, this flexibility has resulted in overall reduction in everyone’s CIBIL scores. Thus, you might have noticed that your CIBIL score might have dropped after the implementation of CIBIL 2.0. In addition, it might happen that some loan providers might not have updated their operations to the new 2.0 model. Thus, in such situations, your eligibility criteria may vary from one loan provider to another, depending on the type of CIBIL score model they are using. Therefore, it is advisable that before you approach any bank or NBFC for a loan, you thoroughly research about the type of CIBIL score model they are using and your subsequent eligibility as per it. Moreover, it is also important that you check your CIBIL score from time to time to keep a tab on your credit health.

Check CIBIL Score
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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522