Before we proceed on to discuss how exactly does CIBIL scores work, let us focus on its history and background. The Credit Information Bureau (India) Ltd, popularly known as CIBIL, is the most important agency for providing credit reports and scores pertaining to borrowers. The Bureau came into existence in 2000 and has continued to expand its presence throughout India. It is supported by TransUnion International and Dun and Bradstreet, which are primer credit bureaus and agencies working globally.
But what does CIBIL do?
CIBIL sources your financial data like loans, credit card information etc. from leading banks and borrowers so as to present it as the CIR or Credit Information Report.
Thus CIBIL score is nothing but a numerical figure based on your credit data which represent how eligible you are to get that loan you want. It shows all your credit details including how much money you have borrowed and how you have repaid it. It sources all your debt and repayment histories which means it will also show if you have missed making any payments or if you have settled any loan.
CIBIL is one of the oldest and most famous agencies that calculate your credit score, Equifax being another one. Credit score is calculated based on your credit report based on the intensive in-house algorithm calculations.
CIBIL scores their credit between 300-900, 300 being the lowest and 900 being the highest. Let’s check the score range out in details.
CIBIL SCORE RANGE
As discussed earlier 300 is the bottom end score and 900, the top. Here is what your score could mean.
0 or -1: If this is your credit score, it means that you have not yet created any credit history created via a credit card or loans. To get a credit history going, you have to consider taking one.
350-550: Red alert! This is a bad score. It means you have been defaulting on payments and the chances of getting new loans/credit cards are minimal.
550-650: This is an average score and acceptable. This means that you are fairly regular with your debt repayments and might be trusted with new credit cards or loans. You applications are likely to be approved.
650-750: Keep it up as this is a good score. You will not face many problems while availing a new credit card or loan. You should stick to this in order to improve your credit score and reach the best score range.
750-900: Congratulations, financial guru! This is the best score range and you have a really good history of repayment. Banks would be glad to offer you new loans.
With all that being summarised, you are all set to creating (credit) histories! But before hurrying to the bank, do not forget to check out the blog on 10 Ways to Improve your Credit Score (hyperlink to be added).
Remember, Happy scores, happy you!