Credit Information Bureau (India) Ltd is the main organisation in India that offers credit scores to each individual. The agency’s job is to give people access to financial information about loans, credit cards, and other investments from multiple financial institutions. These gathered financial data are later analyse to form credit score and reports.
CIBIL Score Range
The Credit Information Bureau creates a three-digit number, the CIBIL score range, varying from 300 to 900. The CIBIL score range is use to assess the creditworthiness of the borrowers, which is develop based on each individual’s credit record. The financial records from the previous six months are examine to determine the CIBIL score using a variety of factors, each with a specific weighting.
Various CIBIL Score Ranges are listed below:
- NA/NH: If the debtors have not used their credit cards or taken out any loans, they have no credit history. Customers with no credit record will have a score of NA/NH, which denotes “not applicable” or “no history,” respectively. The debtors may consider getting a credit card to establish their credit history before obtaining a service like a loan for credit.
- 300 – 599: A score between 300 and 599 is regard as having a low CIBIL score. Due to the borrowers’ high default risk, there are increased odds of a loan application being denied if they have this CIBIL score. Additionally, the borrowers who missed their credit card and loan EMI payments have credit scores in this category. It indicates that you have missed payments on loan EMIs or credit card obligations.
- 550 – 649: Your chances of having a loan authorise are modest if your score falls between 550 and 649. Although a few lenders would consider giving credit to someone with a CIBIL score at this level, it is consider a fair range.
- 650 – 749: The CIBIL score in this area, between 650 to 749, is good. The financial institutions may easily accept the loan application if they view this score as a reliable indicator of credit conduct. Banks may, however, continue to charge exorbitant interest rates on the loans.
- 750 – 900: A CIBIL score in this range is highly acceptable. If the borrowers have settled all their loans and credit card bills on time, they should have a credit score in the 750–900 range. If the CIBIL score is in this area, there is a greater probability of obtaining a loan approved at the best interest rates.
How is the CIBIL Score Range obtained?
These elements are used to obtain a CIBIL score:
- Past payment history: When calculating, the past debts from the previous six months are factored into the equation. Your CIBIL score is more influenced by your recent payment history than your previous credit history. Borrowers’ credit scores will deteriorate if they don’t make any payments on time. On the other hand, paying off all of the debt before or on time will eventually result in a high CIBIL score.
- Loans: The percentage of loans taken over borrowers’ total income is also properly consider while calculating the CIBIL score. On the other hand, if borrowers have a modest loan balance, it suggests a favourable effect on their credit score. A high loan balance will lower the credit score.
- Past Settlements and lapses: A low CIBIL score will result from many write-offs, particularly in the recent past. Multiple write-offs will also affect your credit score. A bad credit score is another consequence of missed loan payments, and missed unsecured loan instalments have a more severe negative effect.
- Multiple loan inquiries: This shows that the borrower is eager to obtain credit and could degrade their credit score.
- Credit Cards: Using credit cards affects your credCIBILit score. When a borrower has a big credit card bill, it shows that they have poor spending habits, which lowers their credit score.
- Secured vs Unsecured Loans: A borrower’s credit rating may suffer if they take out several unsecured loans. Additionally, the CIBIL score will increase if there is a history of repaying secured loans.
An optimum CIBIL score ranges from 300 to 900, of which 900 is the maximum CIBIL score. Generally, the CIBIL score differs from institution to institution for every activity. Banks and other financial institutions consider a CIBIL score of 650 or more optimal. An individual can freely check their CIBIL score by logging in on the official CIBIL website, the borrowers need to browse the CIBIL score login, and they are all set to know about their credit range.