The CIBIL score is a three-digit number assigned by the Credit Information Bureau (India) Limited, which is a certified credit rating agency appointed by the Reserve Bank of India (RBI). The score offered to individuals is a summary of their creditworthiness and is based on their overall credit behaviour – credit history and previous payment record. It is one of the major parameters that lenders use to check CIBIL free score when determining the borrower’s eligibility for a loan or a credit card.
CIBIL Score Meaning and Range
There are various credit score ranges from 300 to 900. The higher the score, the better. Usually, lending institutions consider borrowers with a score of 750 and above responsible and eligible for credit. However, it is important to check your CIBIL score and understand the range and its implications.
750 – 900: This is an excellent range suggesting the borrower is consistent with their payments and has a remarkable repayment history. Seeing them as low-risk borrowers, banks and financial institutions willingly offer credit cards and loans at the best interest rates.
650 – 749: A credit score falling in this range implies good credit behaviour and encourages the borrower to further improve their score to get the desirable rate of interest and speed up loan approvals.
550 – 649: This is considered a fairly average range that suggests the borrower has not been consistent and is struggling to pay the dues on time, which reflects on the CIBIL score. Thus, only a few chosen lenders would consider providing credit that too at a fairly high rate of interest. The borrower, at this stage, should work to increase the score to get the best deals.
350 – 549: This is the least desirable CIBIL score range as it indicates the borrower has missed or delayed paying the loan EMIs or credit card bills. A borrower with a score as poor as this will face difficulty getting the loan application sanctioned.
NH/NA: If the borrower does not have a record or history of credit usage or if they have never taken a loan, then their CIBIL score will show up as ‘NH/NA’ meaning ‘No History’ or ‘Not Applicable’. In such cases, borrowers should opt for credit as it will help them build a strong credit history and get access to various credit products.
Ways to Increase Your CIBIL Score
Having a high CIBIL score is important as it helps lenders to decide whether or not a high credit amount should be extended for use. If the score falls below the desired 750-900 range, here are a few tips that borrowers can follow to get it back on track.
Make Timely Payments
The first and the most effective step to take is to clear any existing dues, be it credit card bills, or outstanding loans. Borrowers must avoid delays and defaults in order to maintain a good credit score. Additionally, they should also keep away from taking multiple loans and too much credit when their hands are full till the existing dues are repaid and the credit score has gone up.
Review Credit Report
Besides regular monitoring, borrowers must also check their credit reports for errors and false records and rectify them on time.
Restrict Credit Usage
Instead of exhausting all the credit limits, borrowers should put a cap on credit utilization. Ideally, the credit utilization limit should be less than 30% if the aim is to boost the CIBIL score.
Monitor Credit Score Regularly
Regular monitoring of CIBIL score is important to stay updated on the credit status. Borrowers can do so either by applying for a subscription plan or by using the CIBIL report provided by the Credit Bureau in India. Accordingly, they can work towards increasing and maintaining the score.
7 Easy Steps to Check CIBIL Score
There are two ways to check your CIBIL score – one if through the lender’s official website and the other one is through a third-party website. To check online CIBIL score through the lender portal, they can follow these simple steps –
Step 1: Visit the chosen lender’s official website
Step 2: Click on the tab saying ‘Get Your CIBIL Score’
Step 3: Enter the required details
Step 4: Create a new user account
Step 5: Next, verify the account details
Step 6: Check CIBIL free score
Step 7: Download the free CIBIL report for the record
The above steps will help you check your CIBIL score online for free only once a year on the website. However, if you wish to access your credit score and report multiple times without interruptions, you should consider signing up for a plan. In any case, you must continue to check the CIBIL report, get the PDF downloaded it or have it sent to your registered email address for the record.
Alternatively, borrowers can also check CIBIL free on various third-party websites following similar steps. The major lending institutions offer this quick facility wherein borrowers can check their credit score with PAN number. This only takes less than a minute. Besides, a customized and free CIBIL report is also provided to give them insight into their overall credit health. Thus, one can stay informed of their creditworthiness.
Summary
While having a high credit score is desirable and important, one should understand that achieving it requires consistency and diligent effort. Therefore, the best and most efficient ways to go about this is to check CIBIL free score from time to time, limit credit usage, rectify discrepancies in the online CIBIL report, and clear off all debts in a timely manner. With the increasing online presence of leading lending institutions and banks and NBFCs offering online CIBIL score checks, borrowers can get access to multiple avenues to keep track of their scores and work towards their improvement. Look up the best lenders and get in touch with them – make sure you are well aware of your credit standing before applying for a loan or a credit card.