Credit Information Companies (CICs), also referred to as credit bureaus, are specialised financial institutions that collect and maintain data related to the credit behaviour of individuals and commercial entities in India. They use this data to generate credit reports and credit scores of individual borrowers.

Now, let’s understand credit score vs CIBIL score.

What is the CIBIL score?


CIBIL stands for Credit Information Bureau (India) Limited. CIBIL is one of India’s four major credit bureaus linked with major banks, housing finance companies, and NBFCs. The other three notable bureaus are CRIF Highmark, Equifax, and Experian. All these credit agencies are licensed by the Reserve Bank of India (RBI). The credit rating calculated by CIBIL is known as the CIBIL score.

All you need to do to access your CIBIL score is visit the official website of the credit bureau at www.cibil.com. You can get your score for free.

A CIBIL report also called a Credit Information Report (CIR), is a running record of your credit and loan-related information, which includes your CIBIL score.

What is a credit score?

A credit rating represents your creditworthiness as a potential borrower. The score is calculated after considering your credit history, including the total debt, the number of credit accounts, credit card bills, credit utilisation information, and repayment history. Besides, the number of credit enquiries for loan or credit card applications is also taken into account while calculating your credit rating.

Having a good mix of secured credit like home or auto loans and unsecured credit like personal loans in your profile also helps boost your overall credit rating. Ultimately, it is a 3-digit summary between 300-900 that reflects your credit history. The credit rating is used to estimate the probability of you repaying any debt on time.

Consequently, the odds of you getting a new credit card or loan increase if you have a high credit rating. Similarly, a lower score can turn lenders away.

Here, it’s crucial to note that a credit score helps gauge your repayment capability as a potential borrower. At the same time, it also helps you bag more competitive interest rates. Typically, in India, most lenders prefer a credit or CIBIL score of 750 or above before granting you a loan.

So, the only notable difference between credit and CIBIL scores is that credit rating can be provided by any of the four credit bureaus. But only TransUnion CIBIL offers your CIBIL score. Lenders deem valid credit ratings from any of the four credit bureaus.

Some tips to maintain a good credit score

Now that you know the difference between CIBIL score and credit score, you should maintain a high score.  Here are some quick tips:

  1. Have a healthy mix of secured and unsecured credit
  2. Pay your credit card bills on time
  3. Pay off any pending loans before applying for one
  4. Do not apply for multiple loans
  5. If your loan application gets rejected, wait a while before applying. Consistent rejections can further harm your credit score.

Over to you

Now you know all about the difference between credit score and CIBIL score. Before approaching a lending institution to apply for a new loan, it’s prudent to perform a credit score check. This way, if your credit or CIBIL rating is low, you can take your time to improve it before applying for a loan. Soft inquiries like you checking your credit or CIBIL score doesn’t impact your score negatively.

To check your credit rating for free, turn to Tata Capital.

0 CommentsClose Comments

Leave a comment

Disclaimer: 

To know more about Terms & Conditions, click here.