Policies, Codes & Other Documents
Credit Information Bureau (India) Limited or CIBIL is a credit information company licensed by the Reserve Bank of India (RBI). There are three others – Equifax, Highmark and Experian.
A consumer CIBIL credit score is a numeric value of an individual’s credit history – ranging between 300 to 900. This number is derived from the credit information report (CIR). This report contains the details of the credit exposure, payment history, defaults, credit duration etc. of the individual. It doesn’t contain savings, investments and other financial asset details. Its objective is to assist lenders to evaluate the creditworthiness of potential borrowers.
Just like individuals, commercial entities also apply for credit instruments. The credit utilization summary of a company gets reflected in its commercial credit report. The companies with a credit exposure of up to Rs. 50 crores get a CIBIL rank ranging between 1 and 10.
Here is a summary of the differences between Consumer and Commercial CIBIL:
|Parameters||Consumer CIBIL||Commercial CIBIL|
|Credit model||CIBIL scores between 300 to 900||CIBIL rank between 1 and 10|
|Report||Credit Information Report||Commercial Credit Report|
|Attributes used for calculation||No. of accounts, No. of loans, No. of credit cards, Repayment patterns, etc.||Company financials, Industry, Credit history, Credit utilization|
The CIBIL scoring/ranking allows banks and other lenders to assess the creditworthiness of individuals/companies. It allows the lender to evaluate the repayment ability before giving out a loan.
A consumer CIBIL score of greater than 700, is considered a sign of a healthy credit handling behavior, hence the lenders often charge a lesser rate of interest from such borrowers. On the other hand, a low CIBIL score attracts higher interest rates as the rates include a higher probability of default as well.
The consumer CIBIL score is also used before issuing a credit card to an individual. The credit limits of the card are increased based on the repayment behavior and CIBIL score movements.
Similarly, a commercial CIBIL rank closer to 1 is an indicator of high creditworthiness. As the rank nears 10, lenders would be wary of lending to such companies. For example, a company in a highly volatile industry such as oil and gas would be ranked higher than one in a much more stable industry like food and textiles.
A consumer CIBIL credit report consists of the following information:
The lenders pay specific attention to:
A commercial CIBIL report on the other hand consists of the following information:
You can also get your credit information report by going to the website in Step 1 and selecting a paid option.
A Commercial CIBIL rank and report can be obtained by subscribing to it by going to the website- https://www.tatacapital.com/check-credit-score.html
There are 3 subscription plans- Basic, Standard and Premium – any one of which can be purchased as per the requirements.
A good consumer CIBIL score/ commercial CIBIL rank makes it easy for lenders to grant loans to the borrower.
Since the entity with a higher CIBIL score/lower CIBIL rank is seen as a better credit utilizer- the interest charged is lesser, and sometimes even the processing fee for such a loan is lower.
A good CIBIL report comes with some pre-approved loans from various lenders. This enables one to achieve their financial goals sooner than expected
Companies with high CIBIL ranking can negotiate better debt deals as even a slight change in interest rates has a compounding financial impact.
Since a CIBIL score/rank is so important to future credit approvals, here are some steps to maintain a good credit profile:
All in all, consumer and commercial CIBIL reports analyze the creditworthiness of individuals and companies respectively. While an individual’s credit behavior can be seen from the type of credit exposure and repayment behavior, the same for companies requires a deeper analysis of their industry type and existing debt structure.
The metric has a similar use case for both entities and it is to their absolute advantage to maintain a good credit history.
Policies, Codes & Other Documents