CIBIL SCORE INDIA

WHAT IS CIBIL ?
CIBIL Limited is Indias first Credit Information Company, also commonly referred as a Credit Bureau. We collect and maintain records of individuals and non-individuals (commercial entities) payments pertaining to loans and credit cards.
These records are submitted to us by banks and other lenders on a monthly basis; using this information a Credit Information Report (CIR) and Credit Score is developed, enabling lenders to evaluate and approve loan applications. A Credit Bureau is licensed by the RBI and governed by the Credit Information Companies (Regulation) Act of 2005.

WHY IS MY CIBIL SCORE IMPORTANT FOR GETTING MY LOAN SACTIONED?
The CIBIL Score plays a critical role in the loan application process. After an applicant fills out the application form and hands it over to the lender, the lender first checks the CIBIL Score and CIBIL Report of the applicant.
If the CIBIL Score is low, the lender may not even consider the application further and reject it at that point. If the CIBIL Score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy.
CIBIL Score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved.
The decision to lend is solely dependent on the lender and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.

HOW CAN I IMPROVE MY CIBIL SCORE?
You can improve your Credit Score by maintaining a good credit history. This will be viewed favorably by lenders and it can be done with 6 simple rules :
1.Always pay your dues on time.
2.Late payments are viewed negatively by lenders.
3.Keep your balances low.
4.Always prudent to not use too much credit, control your utilization.
5.Maintain a healthy mix of credit.
6.It is better to have a healthy mix of secured (such as home loan, auto loan) and unsecured loans (such as personal loan, credit cards).
7.Too many unsecured loans may be viewed negatively.
8.Apply for new credit in moderation.
9.You dont want to seem Credit Hungry,apply for new credit cautiously.
10.Monitor your co-signed, guaranteed and joint accounts monthly.
11.In co-signed, guaranteed or jointly held accounts, you are held equally liable for missed payments.
12.Your joint holders (or the guaranteed individual) negligence could affect your ability to access credit when you need it.
13.Review your credit history frequently throughout the year.
14.Purchase your CIR from time to time to avoid unpleasant surprises in the form of a rejected loan application.


WHAT MAJOR EFFECTS MY CIBIL SCORE?
There are 4 major factors that affect your score:
1.Payment history
2.Making late payments or defaulting your EMIs or dues (recently or consistently) shows you are having trouble to pay your existing credit obligations and will negatively affect your score.
3.High utilization of Credit Limit While increased spending on your credit card will not necessarily affect your score in a negative manner, an increase in the current balance of your credit card indicates an increased repayment burden and may negatively affect your score.
4.Higher percentage of credit cards or personal loans (also known as unsecured loan) Having a balanced mix between the secured loans (such as Auto, Home loan) and unsecured loan (such as Personal loan, Credit Card) is likely to have a more positive affect on your score.
5.Many new accounts opened recently If you have recently been sanctioned multiple loans and credit cards, then lenders will view your application with caution because this behavior indicates your debt burden has increased increase, which will negatively impact your score.


WHAT DOES IT MEAN WHEN MY SCORE IS "NA" OR "NH"?
A Score of NA or NH is not a bad thing at all. These mean one of the below :
1.You do not have a credit history or you do not have enough of a credit history to be scored, i.e. you are new to the credit system
2.You do not have any credit activity in the last couple of years
3.You have all add-on credit cards and have no credit exposure
4.It is important to note that while these Scores are not viewed negatively by a lender, some lenders credit policy prevents them from providing loans to an applicant with Scores of NA or NH (applicants with no credit track record). Hence, you may have better chances of applying for a loan elsewhere.


WHAT IS CIBIL SCORE 2.0?
The CIBIL Score 2.0 is a new, updated version of the Credit Score which has been designed keeping in mind the current trends and changes in the consumer profiles and credit data. Banks are gradually switching to the new version and you may find a difference in the new version when compared to the earlier version (i.e., the score 2.0 may be lower than the earlier version).
Please note, the score currently available to you is the earlier version. However, the difference in the Credit Score does not impact the credit decisioning during the Loan Approval Process as both the versions of the score may have a different score eligibility cut off while processing the loan application.
For example, if your Bank earlier used to sanction loans/credit cards to individuals with a credit score of 800 and above it may now lower its score cut-off, if it has switched to the new version.
The CIBIL Score 2.0 also introduces a risk index score range for those individuals who have a credit history of less than 6 months. These individuals were categorized under the category of No History- NH in the earlier version. The score range is from 1-5, with 1 signifying high risk and 5 signifying low risk.

WHAT IS CIBIL RANK ?
The CIBIL RANK, summarizes your CCR in the form of one number. The rank is similar to the CIBIL Score provided for individuals. However, it is provided from a scale of 1 to 10, where 1 is the best rank that can be achieved.
The rank is only provided to businesses that have credit exposure of Rs. 10 lakh to Rs. 10 crore.
Most importantly, CIBIL Rank indicates your companys likelihood of missing payments, which is one of the key factors considered by a lender while evaluating a loan application. The closer your rank is to 1, the better are your chances of securing a loan.

WHAT IS YOUR CIBIL CCR?
A CIBIL CCR is a record of your companys credit history. This is created from data submitted to CIBIL by lending institutions across India. The past payment behaviour of a company is a strong indication of its future behaviour.
It is therefore important to understand that the CCR is heavily relied on by loan providers to evaluate and approve loan applications.