In the financial industry, the term CIBIL score is one of the most frequently used terms. This score is a key indicator of your creditworthiness and significantly influences lenders' assessments of your repayment capacity. Therefore, maintaining a high credit score is crucial for increasing your chances of quick loan approvals.
Commonly known as the CIBIL score, this value is derived from data submitted by your previous lenders to the credit bureaus, with updates occurring typically every month. A high score, generally considered to be above 700, represents financial stability, a regular source of income, and a history of on-time repayments. All these factors play an important role in the decision of your loan application with SMFG India Credit.
Keep reading to discover how you can conduct a credit or CIBIL score check online to stay on top of your financial health.
What Is the CIBIL Score?
A CIBIL score is a number representing the creditworthiness of an individual. This is one of the most basic parameters used by financial institutions including SMFG India Credit to evaluate the creditworthiness of a loan applicant.
A CIBIL score is generated by credit bureaus, which are authorised by the RBI (Reserve Bank of India) as official credit rating agencies. TransUnion CIBIL Limited (previously known as - Credit Information Bureau India Limited), is one such trusted and leading credit agency in India. They are known for estimating accurate scores and helping financial institutions to process loan applications made by individuals as well as businesses.
Credit score or CIBIL score as it is generically known, is one of the important factors that we look into when prospective borrowers apply for loans. A good CIBIL score represents the economic stability of an individual which in turn makes financial transactions easier.
However, at times, it may not be very easy to understand how to read and interpret your credit report properly. There is a vast difference between a credit/CIBIL report and a score. A credit report is a detailed document of your credit history consisting of credit card transactions, the total number of loans, employment details, contact information, etc. On the other hand, the CIBIL score is a three-digit number representing the summary of the credit report.
Credit reports are generated by organisations called credit bureaus. Lending institutions provide them with the data of borrowers based on PAN card numbers, which are then used by these organisations to generate credit scores and reports for each individual/entity.
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Credit Score Ranges
Most credit rating agencies have credit score range between 300 - 900. For example, CRIF as well as CIBIL following this range. 300 is the lowest and 900 is considered as the highest CIBIL Score.
Excellent
This helps to get the best possible offers on loans with lower interest rates.
Very Good
This is the ideal score.
Good
This can be improved quickly.
Fair
This is not a good score and should be improved.
Doubtful
This is not a good score and should be improved.
Bad
This is not a good score and should be improved.
How to Check Your CIBIL Score?
You can check your CIBIL score online to make informed financial decisions. Here are some of the ways through which you can conduct a free CIBIL score check:
1. Directly from the Bureau's Website
Most credit bureaus allow individuals 1 free credit score check. For instance, if you would like to know your CIBIL score, you can log into the CIBIL website and create a free account. Enter your details. A valid ID such as your PAN, Voter ID, Ration card, Passport etc. and the corresponding number is required. After successful account verification, you will be able to see your CIBIL score.
Next, based on this score, you can select a lender and apply for a loan. Please remember that most bureaus allow you to check your CIBIL score online only once through a free account. A paid account will enable you to check your credit score more times in a year.
2. From Your Existing Lending Firm
Some lending firms allow their customers to know their CIBIL score for free once a year through the logged-in section of their websites (Netbanking) or mobile apps. You can contact your lender or log into their net banking / mobile banking applications to check if they provide this facility. If they do, you can follow these general steps to check your credit score through their website:
- Enter your details.
- Verify your information by entering the OTP you receive on your registered mobile number.
- Access your credit score and report.
3. Third-Party Apps
Certain apps allow registered users to view their credit scores and credit reports for free. For instance, if you are registered with a third-party payment, credit or any fintech app, you can avail of their free online credit score check facility which is available in most cases.
Similar to the previous methods, you will need to enter your details and verify your information by entering an OTP.
What are the requirements to check Your Credit Score?
PAN Number
Employment details
Personal Details
Apply for a loan or credit card
How is Credit Score Calculated?
A credit score is calculated based on various factors such as your credit history, any past rejection of loan applications, credit utilisation and more. The credit score of an individual takes into account many factors, including the overall history of repaying debts, loan applications and credit card usage. There are a total of 200+ variables having different values which can be used as inputs. These inputs are entered into an algorithm which is designed specifically for credit score estimation.
Some of the main factors affecting the credit score are:
- History of Bill Payments: Lending firms assess the payment history of loan applicants, typically for the past 6 months, to understand their financial behaviour. Consistent on-time payments can positively impact your score.
- Active Loans: Applicants with multiple pending loans may find it challenging to qualify for a new one or may be subjected to higher interest rates.
- Type of Loans: Secured loans (like car loans) often come with lower credit score requirements compared to unsecured loans (like personal loans), as they are backed by collateral.
- Delayed or Missed Monthly Instalments: Multiple missed payments can negatively impact your credit score, which may, in turn, lead to the rejection of your loan application.
- Multiple Loan Applications: Several hard inquiries can temporarily lower your credit score, which is why it is recommended not to apply for multiple loans frequently.
- Utilisation of Credit Card: Low credit utilisation can signal to lenders that you manage your funds responsibly and can repay your debts on time. It is best to keep your credit utilisation ratio at or below 30%.
What Are the Factors That Are Considered for Calculating a Credit Score?
Let us briefly revise the various factors that reflect your financial habits and history, ultimately affecting the calculation of your credit score:
- Recent credit or repayment activity
- Length of credit history
- Number of credit inquiries in a specific timeframe
- The mix of different credit types
- Total amount of existing debt
- Amount of credit utilisation against the available limit
