What is a Good CIBIL Report?

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A CIBIL report is a single unified document that provides a detailed overview of your credit history across different lenders over a significant time period. It is a comprehensive report that provides details of an individual’s or corporate entity’s borrowing history and repayment record. The credit report includes the following information and you can download the free Cibil Report through Wishfin.

Personal details of an applicant (name, age, gender and address)
Employment details and earnings
Number of hard enquiries made by potential lenders on receipt of the loan/credit card application
Records of previous and current loans along with the payment record
Any defaults on loan
Total credit limit and the amount spent monthly (Credit Utilisation Ratio)
The details of settled loans, if any
Any credit card payment defaults
Credit Score

This report provides lenders detailed information on the applicant’s creditworthiness based on previous and current credit behavior. Based on the report, lenders take the lending decision. But more importantly, it provides you with an opportunity to analyze your credit habits and take corrective action if needed. Being aware is the first step to good financial health. As the number of loans and cards pile up, even the most disciplined among us can lose sight of our credit situation. And this is not to be taken lightly, because whether you like it or not, all your credit habits get recorded by financial institutions – it’s like karma. So, a CIBIL report is especially empowering because it helps you understand the workings of credit better and keeps you one step ahead.

How is CIBIL Report Generated?

Credit Information Bureau of India Limited (CIBIL), India’s first Credit Information Company, collects and maintains the records of an individual’s and non-individuals (commercial entities) credit-related transactions such as loans and credit cards. These records are provided by banks and other lenders every month to the Credit Bureau. Using this information, a Credit Information Report (CIR) and Credit Score are developed. When you check your score on Wishfin, you see this exact score and report generated by TransUnion.

How is Cibil Score Calculated?

The member banks and financial institutions report monthly the details related to the credit activity of the customers to the bureaus. This includes data of each loan or credit card repayment made by the customer during the period and even the late or skipped payments. The report comprises new loan applications, interest rates, the credit limit on cards, the status of all loan accounts including those ‘written-off’ or ‘settled’ or ‘closed’. After a complex statistical analysis of the provided information, the cibil score is calculated. Timely credit payments generally lead to a good score. Candidates with a high score have better chances of getting a loan or a credit card.

Factors Affecting CIBIL Score

This is one of the most commonly asked questions about CIBIL Check – ‘Which factors affect your CIBIL Score?’ The answer includes your credit history, payment date, number of unsecured loans, credit utilization, etc. explained in depth below.

Credit History: It is believed that roughly 30% of your CIBIL score depends on your repayment history and timely payment of your dues. Individuals not having any kind of credit history will most probably have a zero CIBIL score. But lenders also look at other factors such as your annual income and employment stability to estimate your repayment capability.

Missing of Due Dates: Your repayment discipline says a lot about your credit habits and repayment capacity and is used to gauge your creditworthiness. Any type of credit product comes with a designated due date. It is structured using things like EMI and regular credit card bills. Missing due dates even once or twice can affect your score. If it happens repeatedly, it will reflect in the credit report generated after every billing cycle and will be read as a pattern. This is terrible for your Cibil score and recovering from here becomes hard. So it’s important to cultivate a habit of timely repayment.

Utilization of Credit: Every person is eligible for a certain amount of credit from lending institutions based on his creditworthiness and factors like income and stability. This is reflected as a Credit Limit. The interesting thing is how much you utilize out of this credit limit also affects your future cibil score, because it gives lenders a sense of your money management skills, your propensity to spend using credit, your credit liability, and the risk to your solvency. It’s all about patterns. Credit Utilization is a metric that tries to capture the way you utilize your credit from the total given credit limit. It is calculated in percentage terms and is also known as the Credit Utilization Ratio. Suppose that you have a credit limit of INR 10,000 and you use only INR 3,000 from it, then your credit utilization ratio is 30%. From this, the lender can judge that despite having INR 10,000 available as credit, the borrower needed only 3000, hence is solvent and can easily pay back the loan. Borrowers who exhaust their credit limit frequently are known as Credit Hungry Borrowers, who find it difficult to get any kind of credit as they are considered a risk. A low credit utilization ratio (below 40%) usually contributes to a good Cibil score.

Multiple Credit Applications: The chances of your CIBIL score getting affected negatively are higher if you frequently apply for loans and credit cards. This is because lenders can sense desperation. You don’t want to be categorized as ‘Credit Hungry’ and thereby a high-risk proposition. Every time you apply for a loan or a credit card, the bank or lending institution triggers a hard inquiry and the applicant is penalized in his score. Most often, this is avoidable and your score unnecessarily suffers. It is better to have a Cibil check for free and only apply after you are confident of your score and apply for products that you are likely to be eligible for. Also, never apply for credit cards, again and again, to pay off old credit card debt. Not only will you be facing a debt trap, but also end up damaging your score making the situation worse. So look before you leap, check before you apply!

Increasing Your Credit Card Limit Frequently: Frequently requesting a raise in your credit card limit can create doubts about your creditworthiness. It can indicate that your debt appetite may overtake your repayment ability. This can negatively affect your CIBIL score. So, it is better to stay well within the existing credit limit and repay dues on time. When the time is right, the bank will voluntarily increase your credit limit as per their assessment.

How to Improve or Increase CIBIL Score?

A good Credit Score is like good health – there are only upsides and no downsides. Whether you choose to seek credit using it or not becomes secondary. The fact that it gives you access to healthy credit if and when you need it is a reassuring feeling. It only strengthens your financial options and keeps you on track though positive habit formation. To get the best deals on credit cards and loans, your score must be good. In India, banks and NBFCs would consider your application only if you have a good credit score. Once you understand the factors affecting your score, taking steps to improve it be it becomes easier. Here are some recommended measures to improve your CIBIL score:

On-time, Every-time’ Payments – Always pay your Credit Card Bills on time. Never miss the due date. Ensure that your EMI deductions are not delayed for any reason. This will demonstrate your credit discipline and establish your repayment credibility.
Debt Consolidation/Debt Optimization/Debt Restructuring – Why keep 4 credit cards and 3 loans running when you can make do with 2? A tight ship is easier to steer. Close down loan accounts and credit cards that you don’t use much. Say, you have been paying 36% interest on your Credit Card, it would be wise to take a Personal Loan at less than half the interest rate, pay off the Credit Card liability, terminate the card, and pay off the Personal Loan using more manageable EMIs. Also, look for options such as turning your Credit Card outstanding into EMI. This helps you stay clear of the debt trap and these smart decisions will reflect in an improving score. Bring down your Credit Utilization percentage and ensure a healthy ratio of secured to unsecured loans. It’s an ongoing process. Keep optimizing.
Utilize Balance Transfer Opportunities – This one is somewhat related to the earlier point but deserves a spot of its own. A balance transfer is shifting to another loan with better interest rates and terms. Why continue suffering the same product when better options become available? You can easily do so for products such as Personal Loans and Home Loans and reduce your liabilities, possibly shrinking your EMIs and expanding your Cibil Score! And it’s a virtuous circle – the more your score improves, the better the deals that become available to you. You can keep an eye on balance transfer offers that get unlocked depending on your score using Wishfin’s recommendation engine, every time you check your CIBIL for free on Wishfin!
No Credit History? Try for a Small Loan or a basic Credit Card – This may sound counterintuitive. But if you have no credit history yet ( and hence a 0, -1 score), it might be a good idea to start building one by applying for an entry-level credit product, even if you don’t need it. Why? Because you have to start somewhere and you don’t want to be stuck with no cibil score when you need finance. But a word of caution – don’t get carried away. Just because a loan with a high credit limit is available does not mean you take it. Opt for something which is manageable and involves regular repayment, so that you can establish a positive repayment pattern. You can move on to the big stuff when your Cibil Score gets going as fast as your career!

Why is my CIBIL Score zero or negative? What does a CIBIL Score of 0, -1, 1 to 5 mean?

Seeing 0, negative, or a single-digit CIBIL Score can be alarming for new borrowers. In most cases, there is no reason to worry, but definitely, some reason to take constructive action. As explained in the earlier point, such scores indicate that the individual has no credit history or an inadequate one.

A CIBIL Score of 0 indicates NH or No history, i.e., no records of the borrower can be found. A CIBIL Score of -1 means that the credit history of the borrower is NA or not available. It may also imply an inadequate credit record or that fewer than 6 months’ worth of records is available (not enough to generate a score).

A CIBIL score ranging from 1-5 denotes the magnitude of risk that a lender may face while lending to a fresh borrower. 5 means less risk. 1 means more risk.

Why is my CIBIL Score is not getting generated?

Sometimes people raise queries like “Why am I unable to check my Cibil Score?”. So it can be due to many possible reasons. The systems at TransUnion identify you and your records based on the details that exist in your banking records. Often this information is provided by you to banks a long time ago. Details like phone numbers, addresses, employment details change with time but are often not updated in your banking records. Sometimes while filling the CIBIL form, one puts in the latest details or the details he can recall. But if there’s a mismatch with the banking records, as a privacy feature, CIBIL does not show you the score, because it has not been able to identify you with sufficient certainty. In such cases, it is best to review all details in your banking records and write to CIBIL using the contact us page on their official website. If there is a discrepancy, only they can help rectify it.

Frequently Asked Questions (FAQs)

Below are few questions for CIBIL Score

How to Find the Exact Cibil Score?

What is Cibil Score for Loan

What is Cibil Score in India

How to use CIBIL Score Calculator?

What is the minimum CIBIL Score for home loan and minimum CIBIL Score for personal loan?

What is the Difference Between CIBIL and Credit Score?

Can I Have More Than One Credit Report?

Why There is a Need for a PAN Card to Check the Credit Score?

Will Multiple Inquiries for a Credit Score Affect my Score?

How Does Credit Score Fluctuate?

The credit score fluctuates because of your borrowing and repayment history. While calculating your Credit Score and generating a Credit Report, the bureaus go through your borrowing and repayment history, and on the basis of them, your credit score is calculated. It might fluctuate that increases or decreases depending upon your repayment history

What is the Range in Credit Score?

What is a Good Credit Score?

What is the Basis on Which a Credit Score is Calculated?

Why Does my Bank Ask for a Credit Score?

How Should I Improve my Credit Score?

Courtsey To : Bankbazaarhttp://www.bankbazaar