If you have applied for a loan or a credit card, there is a high chance you would have heard about the term ‘CIBIL Score‘, ‘credit rating’ or ‘credit score’.
Through this blog, we will decode everything about CIBIL and how to check CIBIL score by using Pan Card and your basic personal details, and that too for free.
A. What is CIBIL?
CIBIL stands for Credit Information Bureau of India Limited. It’s the oldest and the most popular company licensed by the Reserve Bank of India (RBI) to function as the credit information provider to banks and financial institutions.
At present, it holds more than 600 million credit records of consumers and more than 32 million records of businesses in India.
CIBIL maintains the credit score of Indian citizens and businesses and is part of the American company by name of Transunion.
Hence, the credit score that CIBIL offers is also known as CIBIL Transunion Score.
B. What is CIBIL Score?
CIBIL Score is a 3 digit number ranging from 300 to 900 which tells the credit worthiness of an individual or a business.
Credit worthiness means the probability of a person/business to return back the loan it takes.
The closer your score is to 900, the better your CIBIL Score and credit rating is.
In simple terms, that translates to how well you have dealt with past credit and loans.
CIBIL also provides a detailed CIBIL Credit report which records all your credit history (both secured and unsecured) from number of sources like banks, credit card companies, NBFCs, government, collection agencies etc.
These include loans such as home loan, personal loan, car loan, credit card usage etc.
Based on multiple factors of your credit report, an algorithm calculates your credit score.
A point to keep in mind is that CIBIL score doesn’t build overnight.
It’s a historical analysis of your past credit consumption pattern and takes anywhere between 12 to 36 months to reach a satisfactory level.
Indirectly, it’s a measure of how disciplined you are when it comes to servicing your loans.
C. How to check CIBIL Score using Pan Card for Free?
You can check your CIBIL Score online on CIBIL’s website for INR 550 per month. You would need to complete few forms and enter details like your address, DOB, ID proof number etc.
However, there’s a better and FREE option wherein you can check your CIBIL score online with just your PAN Number through websites like Paisa Bazaar.
Here’s a step by step guide on how to check the CIBIL score for free.
(If you don’t know your score yet, do check it and comment below the range in which you are currently e.g. My credit score is in the range of 850-900).→ Check CIBIL Score for FREE ←
D. Importance of CIBIL Score?
CIBIL score is sort of a hygiene factor when it comes to your loan approval process.
The bank or financial institution looks at your CIBIL score to form your first impression as a borrower. If it’s low, your loan application may be outrightly rejected.
If your score falls in a comfortable range, then only the bank or the loan disbursal company will proceed further to review your loan application and look at other factors before approving the loan.
Remember, a poor CIBIL score means a high probability of your loan application getting rejected.
However, a good CIBIL score means your application will be considered and reviewed but accepting it is at the sole discretion of the bank/financial institute.
Typically, a score above 700 is considered to be good.
E. Factors that are not part of your CIBIL score calculation?
- Your saving bank balance
- Your education level
- Your annual income
- Your gender/race/ethnicity
F. How to read your CIBIL report?
Your CIBIL report contains your lending history of the past 5 to 7 years and includes the following sections:-
- CIBIL Score
- Personal information like your name, DOB, gender, contact details, PAN details etc.
- Loan accounts and credit cards hold till date. This section also talks about the loan type, current loan balance, overdue amount, defaults etc. for each of the loans in the history.
- Employment details of the user
- Contact details of the user which have been updated with the participating CIBIL members from time to time
G. Benefits of a great CIBIL score?
- Ability to get credit easily
- Less rate of loan rejection
- Quick approval of loans
- Increased chances to get approval of higher limits
- Lower interest rate on home loan and car loan
H. How to improve your CIBIL score?
Generally, improving your CIBIL score happens gradually over a period of 12 to 36 months.
There are multiple practices which you can adopt to ensure you have a great credit score.
Read about those practices and behaviors in details in my Blog “ 6 effective ways to improve your credit score fast”.
I. Does CIBIL affect the chance of me getting a loan/credit card approved?
As mentioned above, a poor CIBIL score is a sure shot way to get your loan rejected.
That doesn’t mean a good CIBIL score means that a loan will always be approved. It depends on your income level, stability of that income and the amount of loan you have applied for (plus multiple other factors) which ultimately define whether your loan will be approved or not.
Keep in mind that CIBIL plays no role towards deciding interest rates or towards approval/rejection of your loan application.
That happens at the sole discretion of the bank.
J. Will checking my CIBIL Score cause it to decrease?
When you check your CIBIL score as a consumer, it is considered as a ‘soft look’ and it doesn’t impact your score anyway.
However, if you have applied for multiple loans and financial institutions take a look at your score/report, it is considered as a ‘hard look’ and signifies that you have applied for multiple loans. That can impact your CIBIL score negatively.→ Check CIBIL Score for FREE ←
Maintaining a good CIBIL score is very much necessary in today’s time.
If you are financially disciplined, chances are that your CIBIL score will be in a great shape.
But if you are not, it’s better you bring some discipline in your money matters else you will always be facing credit related issues due to your lower CIBIL score.