Modernization comes with active competition, which might require a major credit from legal sources such as banks. But to avail of such loans from these institutions require a good credit score. If you want to have credit for a large sum of money with a subsidized interest rate, then having an excellent credit score can help you in the greater run. So in this article, you will find detailed information on How to get your Free Credit Score & Annual Credit Report online? This would include credit scores from the CIBIL organization.
What Is CIBIL Score?
In this article
The CIBIL stands for Credit Information Bureau (India) Ltd. It is a Reserve Bank of India (RBI) authorized credit agency that provides credit reports and scores belonging to an individual who applies for it. CIBIL refers to the individual’s financial information, including past loan/loans, credit card/card details from banks, and other financial establishments in India. A CIBIL credit report provides this information in a legalized format. This drafted format of the report is a Credit Information Report (CIR). These details are also used to get your credit score for you or the organizations that have asked for it.
A CIBIL score is a three-digit number, which varies from 300 to 900. The score can not exceed this range. Therefore, a score of 300 is the minimum, and 900 is the maximum. The score depicts how worthy is the individual for the credit if he/she asks for it. The higher the CIBIL credit score better is credit credibility. This indicates a good credit record. Based on this, the repayment attitude/behavior of the borrower is evaluated. The CIBIL scores are computed based on past financial details/data of the individual following the past repayments of credit. The data is then provided to an algorithm that uses different weightage to calculate the final score.
How Can You Get Your Score Online?
1. Visit the official CIBIL website
2. Enter Details
3. Make Payments
4. Authenticate And Answer
5. Final Step
Suppose authentication fails, which generally does not happen. You can enter the details in the hard copy. Also, you need to send that hard copy of the application to the CIBIL officially by mail. Then afterward, You will receive the report desired in the registered mail.
How Is The CIBIL Credit Score Calculated?
A CIBIL Score Is Calculated Based On 4 Major Factors That Are:
- Payment History, which accounts for 30% of the total score
- Credit Exposure which occupies 25 % of the same
- Credit Type and Duration also makes 25 % of the score for credit score.
- The rest of the other factors account for 20 % of the total score.
So, Let’s dive deep into these factors to get a clear picture of them:
i. The Discrepancy In Payment Behaviour
Your past payment records account for the major influence on your score sheet drafted. It is crucial to pay your card bills and loan EMIs on time every month. As per a CIBIL analysis, a 30-day neglect/ failure to do the same can decrease your score by 100 points or even 150 points at a go. If you have multiple credit bills to pay, it is always recommended to set up reminders to prevent delaying payments. Any forfeit in the payments reflect negatively on credit score and indicate incompetence to repay credit EMIs.
ii. High Ratio Of Credit Utilisation To Its Limit
You should observe and record your credit utilization ratio, especially for credit cards. It is the ratio of credit used to the credit limit that is available on the card. It is advisable to keep the ratio as low as possible, possibly around 30-40 %. A high credit ratio will send a message that you are credit hungry and at a higher risk of default. So, try to keep the credit limit as high as possible.
iii. Outstanding Payment On Credit Bills
If you have any unpaid dues, then that will be shown on your credit report; it takes a negative charge on your score. It is recommended to pay off any outstanding dues even if you feel that the amount is too small to create any differences.
iv. Debt Trap Created By Paying Only The Minimum Amount Due
Tossing over the full debt payment by paying only the minimum amount leads to the interest combining your outstanding balance, further elevating the payment EMIs and creating a Debt trap. So, always pay your credit bill in full, and this will also elevate your score on payment behavior checkpoint.
v. Having A Proper Mix Of Secured And Unsecured Credit
Always try to maintain a healthy balance of secured and unsecured loans throughout your credit history. If you have a high number of only one type, it indicates that you don’t possess experience handling both types of credit. The lenders always consider these. Home loans and car loans are a few examples of a secured loan, while a credit card is an unsecured loan.
vi. Time Period And Timeline Of Credit History
credit history implies the total number of years that have passed since the first credit account that you have or had. If you have a long credit history, it helps lenders reach a better conclusion when offering you credit. It is reasonable to focus on establishing a credit history in the earlier stage of life. Following this will help you have a good record of credit transactions while taking, for example, a home loan in the future.
vii. Refrain From Closing Down Old Credit Card Accounts
Long-time Credit cards are a great method to show you credit history, so never close them as you might lose that history that could boost your credit score. So always refrain from shutting down your old credit card account.
viii. Discrepancy In CIBIL Report
A CIBIL report is one which contains details of current and past credit accounts. If there are any errors, get it rectified immediately as it could downgrade your score.
Steps To Improve/ Maintain The Health Of The Credit Score
Having gone through the various factors that impact your credit score, so here is a cheat sheet to improve/ maintain the health of the credit score:
i. Paying loan EMIs on time and avoid defaulting on it.
ii. Paying credit card bills on time fully before starting of next cycle of billing. Try clearing of bills each month.
iii. Avoid over-leveraging on the limit granted.
iv. Maintain a clean financial record without any late payments.
v. Look to make a decent balance between secured as well as unsecured credit.
vi. Continue to keep a low credit utilization ratio (20-30%) of the actual credit card limit. Extent the credit limit to have the same effect while maintaining a similar credit bill.
vii. Always examine your credit score annually through CIBIL reports.
viii. Examine credit reports periodically. It should be done to ensure that report is error-free.
ix. Have copies of the credit report, probably in a hard format, with you.
With the understanding of the above measure,s no,w you can have a CIBIL Credit Score online for yourself.
Zones Of CIBIL Credit Score
Based On The CIBIL Scores, There Are 4 Zones Divided Between The Range 300-900
i. Zone 1 – It ranges between 350- 549 in the CIBIL Credit Score timeline
A CIBIL score in this range is regarded as a poor CIBIL score. It implies you have been either late/ defaulted in paying your credit card bills or EMIs of the loans you have procured. It is nearly impossible for you to obtain any credit if you lie in this zone. This is because it owes to the concern that you are much likely to turn into a defaulter.
ii. Zone 2 – It Ranges From 550 To 649 In The CIBIL Credit Score Sheet
A CIBIL score in this range is regarded as a fair one. So, some institutions could lend you credit, but this would come with strings attached to it. Either the interest rate would higher than the market rate, or the credit amount provided be less. It signifies that you might have difficulties paying credit bills, not having a good mix of credit procured, or many more factors listed below. You need to put up with it by taking serious actions further to enhance your CIBIL score for reasonable deals on loans.
Zone 3 -It Lies In The Range Starting From 650 To 749
A score in this range displays that you have good credit behavior with nearly no defaults. A score in this zone is considered to be a good one. Many organizations would be willing to give you the credit that you want. But with this, you need to have the good negotiating power to have loans under your belt at the desired principles. But for a hassle-free process, you might look to advance to the next zone by nutting those small bots at the right place.
Zone 4 – This Is The Last Zone In The CIBIL Credit Score Timeline Varying From 750 Till 900
This zone is considered to be an excellent zone. You might think of it as a zone wherein lenders will be after you so that you take loans, particularly from them. It shows your impressive payment history and smart work given by you in handling credits. Banks will give you credit at the lowest possible rates that you look for as there are the least chances that you might become a defaulter.
However, there is another zone, which is NA/NH. If you have no prior credit history, it means that you haven’t taken any credit. Then your CIBIL score will show NA/NH, which implies that it is either “not applicable” or has ” no history.” If you have neither obtained a credit card nor have borrowed a loan, then you will have no credit history in the database. You might need to take credit, as it will enable you to create a credit history and get a ticket to credit products provided by the lenders.
1. What does a high or a low credit score signify, really?
A high CIBIL credit score certifies that there is less probability of default from that individual. Therefore attracting more lenders to lend money at a subsidized rate of interest. A low CIBIL credit score indicates the likelihood of a default by a person applying for the credit.
2. How will a decision to give away a credit card affect my score?
If you possess a credit card with clear payment history for a long time, say about 5+ years, it will not just express your responsible credit behavior also reflect your credibility to handle unsecured credits. Moreover, having a low utilization ratio on the same will further boost your scores. If you already have an old credit card, then try not to give it up for a new one. Instead, you can have both of them with low utilization in each.
3. How to get a CIBIL score without paying a fee online?
Unfortunately, CIBIL services are chargeable. CIBIL does not provide your CIBIL report or score without charging a fee for the same through their portal. Some other online websites and tools can deliver you a rough estimate of your credit score. But these are based on the specific input parameters that may be related to your credit history. But this score is just an approximated figure and can not be considered as your real CIBIL score. The actual score can only be retrieved by paying the fees of the mentioned service.
4. Why CIBIL score more important to customers/ individuals looking for credit?
Your CIBIL score illustrates your credit-worthiness as the higher a score lesser are the chances of defaults by the customer. And is hence a crucial numeric figure for a credit provider. Credit organizations look up this score when you connect to them for any credit, like loans or credit cards.
5. Is it possible to change the CIBIL Score if you have a bad one?
The CIBIL Score will alter based on several factors such as loan/credit account, credit repayment history, missed payments, etc. that you do in the future. A better response to these things will help you grow your score and have better chances of getting the best deals for your credit.
6. What is Credit Information Report (CIR)? Is it any different from CIBIL Score?
Credit Information Report (CIR) is a detailed overview of your credit history drafted based on the last 5-7 years of credit, loan accounts, and actions related to it. The CIR also comprises personal and various other credit details, including lenders’ investigations on your credit applications. The CIR is mainly a list of records of your EMI repayments and credit card payments made in the specified period. The CIBIL Score is a piece of the CIR you receive. The score is evidence of your credit/financial health to have a credit from lenders computed based on the numerous factors used to formulate the CIR.
7. Why is the PAN card needed to check the CIBIL Score?
PAN Card is the unique identifier that is used to access all your financial activities carried by you. Whether you are looking for a new bank account, transferring /depositing a higher value, or seizing a loan or credit card, a PAN card is needed for all these types of applications. The PAN card is a primary tool that enables organizations like CIBIL to recognize the individuals when they are requesting their credit reports. So, make sure to have your PAN card details with you while filling your application for the CIBIL report.
8. How do institutions like CIBIL obtain the information of your credit/loan history?
Banks and other government agencies that are a member of CIBIL, submit financial information of a person every month (30-45 days Almost) to CIBIL in trade for access to the credit reports and score formulated by CIBIL deducing their loan/credit applicant’s economic credibility. CIBIL obtains your financial data associated with credit accounts from your bank itself as the bank has authorized them.
9. Will there be any effect on my Credit Score if I check on it?
No, Because if you are requesting your own credit score/report, it is presumed to be a soft check. This will not have any consequence on the credit score that you have currently. But when you refer for any credit and your lender runs a check, that’ll be deemed a hard check, and it can negatively influence your credit score. If your loan application gets dismissed, it is often told not to check with other banks instantly, as more hard checks can cause more damage to your credit health.
10. How to eliminate errors from the CIBIL Credit Information Report (CIR) that you brought?
If you have examined your Credit Information Report (CIR) and located errors in the details, you can get in touch with TransUnion CIBIL Limited directly through their customer care services and get it corrected. TransUnion CIBIL Limited will evaluate your request and bring in necessary changes with a nominal fee. If you are scheduling to apply for a loan or any other credit, you must review your CIR to fix errors and earn your updated credit score/report.
11. What is CIBIL 2.0 that is being utilized by TransUnion CIBIL limited?
CIBIL 2.0 is a new scoring model utilized to compute the credit report for individuals with 6 months or less credit history. They are assigned a score based on the risk components involved in providing credit to these borrowers. The CIBIL 2.0 presents a new risk index ranging from 1 to 5 to individuals with new credit history. The higher the risk index number, the lesser is the risk of defaulting on the credit asked. CIBIL 2.0 is designed to match the current economic and credit trends prevailing in the market.
To cope with the necessities and luxuries of life, we try our best to provide them to our loved ones. To procure them, we might require credit that might be high about our current income. So we apply for credits from the lenders. But to convince them to provide us with the asked credit, the lenders require a concrete piece of evidence that you would be able to pay them up with interest.
So, the Credit Score serves as a medium to convince them to provide us with the credit. So it is on us to provide them with that reason under which they should willingly provide us with the credits. Following the above cheat sheet and rectifying errors, if any, in the annual report will help you to maintain or improve your score to get the loans on your desired conditions and market rates.