What is The CBIL Score?

Are you looking for a loan to pay your college fees, buy a new home, or plan to start a start-up? Well, whatever the reasons this article will help you to have a basic idea about CBIL score so you can update financial plans accordingly.

In this article, you’ll learn about “what is a CBIL score? Why does a CBIL score matter? And what are its consequences if you ignore it?” 

Stay tuned because this article will also tell you how to maintain your CBIL score and quickly get your loan at a low interest rate.  

Let’s Get started.

What is a CBIL Score? 

A CBIL Score is a simple indicator consisting of a 3-digit numeric value range between 300-900. It shows the performance of your credit history and evaluates your risk-taking capability. 

The math is simple a higher credit score is good and shows a positive portfolio whereas, a lower credit score will lose the confidence of the lenders to approve the loan. 

The full form of the CBIL is Credit Information Bureau (India) Limited licensed by RBI for evaluating the credit score of any firm or an individual.

There are four reputed credit evaluation and information companies currently operating in India (licensed by RBI). Those are Equifax, Experian, Highmark, and CBIL. 

CBIL is the most popular among these four in India. CIBIL India is a member of the TransUnion group of an American Multinational Company. 

CBIL currently operates and evaluates, more than 32 billion businesses and  600 million individuals. The only function of CBIL is to estimate credit scores based on credit history and performance of repaying loan interest.

What is Included in The CBIL Report? 

First, you should understand what is a CBIL Report. According to the CBIL, it is a Credit Information Report or CIR.

A CIR is a report of credit payment history related to acquiring various loan types in a given period from a credit institution. It doesn’t hold information about your savings, FDs (Fixed Deposits), or any investment. 

Your CIR or CBIL Report contains detailed information on your undertaking of various loans such as; home loans, car loans, insurance loans, business loans, or overdraft facilities.

Some key aspects help you to get an overview of a CIR report. Those are as follows;

1. CBIL Score;

It is the performance score given based on your credit history payment. As we mentioned earlier a score between 700 and 900 is considered good or positive and vice versa if it’s below 700. 

2. Personal Information;

It holds information such as name, DOB, contact, name, gender, PAN, Identification number, and voter ID.

3. Contact Information; 

This section provides the addresses and telephone numbers. Additionally, four numbers are present.

4. Enquiry Information:

With each loan or credit card application, the respective bank or financial institution will check the account holder’s CIR. The bank system records the information in the account holder’s credit history, which is the same as the Enquiry. 

5. Account Information: 

This section holds the record of every action and information of the respective account holder’s account. Information like the date of account opening, money lender names, ownership information, account number, last debit or credit of money, and transactions. 

6. Employment Information: 

The members of banks and financial institutions provide the details of your annual or monthly income. 

Why is CBIL or Credit Information Report important to You?

You may think of starting a business by applying for a handsome loan from any financial institution but in your previous year, you take some loans, that are outstanding now. 

The financial institution analyzed your CIBL score and denied your request for a business loan because your CIR score exhibited, a weak status in your credit payment history. They will lose their faith and tell you to move on.

A CIR report is more than a report it holds details of your income, payment history, and performance feedback from different financial institutions. 

Therefore, it became necessary to ask yourself “When was the last time you took a loan?”, “What is your current CBIL score?”, or Are you worthy of having a loan (liability)? 

The history of a borrower’s debt payment is called a credit history. This includes the details of financial institutions, banks, credit card agencies,  etc.  A credit score report from CBIL usually takes 18-36 months to make.

Why Does a CBIL Score Matter?

A CBIL score matters to you due to the following factors; 

1. The CBIL Score revealed the credit history payments from different credit institutions.
2. The CBIL score is the first document of proof asked by any lender to check financial stability. 
3. The credit score is legitimate authorized mandatory financial data by the Reserve Bank of India.
4. Without a perfect CBIL score, a borrower fails the obligations for financial requirements. Any lender can reject your application based on this.
5. The minimum score of 700-900 CBIL is considered good.

What are the Consequences if You Ignore the CBIL Score?

The consequences of ignoring a CBIL score are as follows; 

1. The lender may give less flexibility on an interest rate even if you acquire a handsome credit.
2. Any financial institution would likely show less confidence in you and may reject your application.
3. A bad credit score means a delay in the quick requirement for a loan. 
4. You may end up in a debt trap. 

How to Maintain and Improve Your Bad CBIL Score?

You can maintain and improve your Bad CBIL Score by following these steps;

1. Pay all the bad debts and outstanding loans.
2. Don’t forget to pay any EMI loan.
3. Use smart strategic plans to reallocate your remaining funds to offset the bad loans.
4. Take help from an expert or you can reach your bank to take advice via an appointment with the manager.
5. Take an account and, monitor regularly of your expenses. 
6. If you have any joint account or extra credit cards take an account of that and ask an expert for advice.

Conclusion

Now up to this point, you get a basic idea of how important is a CBIL score for a loan. Therefore you must take the right steps to achieve a good 700+ CBIL score. Any financial lender will first check your credit score and decide upon approving a loan to you. You must follow a good habit of financial spending and maintain a stable financial status.