You walk into a bank, ask for a loan, and the money gets deposited to your bank account.
That’s the utopian fantasy for loan disbursal.
But the process is not simple. It often takes weeks for banks to process our loans.
What gives? Why do banks take so much time to process loans?
It all comes down to one thing – trust. Do you have the capability to repay the bank?
But how do the banks figure out your creditworthiness?
Since they don’t know you, they use a third-party for verification – CIBIL, a credit rating agency.
CIBIL provides a credit score that acts as your financial report card. Let’s see what that means.
What is a CIBIL Score?
Your CIBIL score is a 3-digit number ranging from 300 to 900. The higher the score, the better your financial track record.
CIBIL measures your creditworthiness based on several criteria – primarily, your repayment track record.
When you file for a loan or apply for a credit card, your bank checks your CIBIL score. A high CIBIL score (700 or more) indicates that you are prudent with money.
Guide Alert: To improve your CIBIL score, here are some tips.
How Important is Your CIBIL Score?
Of the four authorized credit information companies, CIBIL is the oldest and has the largest customer base.
Around 85% of the financial institutions in India use CIBIL. Further, banks and NBFCs give preference to CIBIL score over any other credit score during the credit approval process.
A good score (650+) is required to get a loan or a credit card. A better score (750+) gives you access to loans at lower interest rates and premium credit cards with high credit limits.
A low score is grounds enough for any institution to reject your application or seek a higher interest rate from you.
Bottom Line: A high CIBIL score provides quicker loan approval and potentially lower interest rate. The lower your interest rate, the more money you save.
There are three other credit rating agencies in India approved by the RBI – Experian, Equifax, and CRIF High Mark.
All the agencies use their proprietary algorithms to estimate your score.
Can you check your CIBIL score for free?
Yes, albeit once a year.
RBI made it mandatory for credit bureaus to provide one credit report online for free to their customers every year.
The free credit report includes the same information that is provided to banks and other lending institutions.
Check your CIBIL score frequently. Stay on top of your credit health and report any inaccuracies that might be affecting your score.
Busting The Myth: My Credit Score Will Drop if I Check My Score Frequently
You can check your credit score any number of times.
Checking your score is treated as a soft enquiry and does not affect the score.
However, when lenders check your credit score based on your loan/credit card application, it is treated as a hard enquiry.
Multiple hard enquiries in a short period can potentially lower your score.
How to Check Your CIBIL Score for Free?
#Step 1: Visit CIBIL’s official website.
#Step 2: Click on ‘GET YOURS NOW’
#Step 3: Create Your Account
Fill out the necessary details such as email address, phone number, name, date of birth, and pin code. You will also have to provide a listed government ID to get yourself verified.
If you already have an account, log in through the “Member Login.”
Your CIBIL score will be shown online and also sent to your email ID.
Exhausted the Free Report Limit?
If you have downloaded the free CIBIL report earlier in the year, you will have to purchase the next CIBIL report.
You can do so following the steps below.
#Step 1: Visit CIBIL’s website.
#Step 2: Choose your subscription plan.
#Step 3: Click on “Proceed to Payment.”
After successfully making the payment, you will be taken to an authentication page. Answer at least 3 out of 5 questions related to your credit history correctly to authenticate your identity.
Your CIBIL report and score will be sent to your email ID within 24 hours.
Hacks to Get a Free CIBIL Score
If you have already checked your score once in the year, additional soft enquiries are chargeable.
We have a hack around that 🙂
To check your CIBIL score for free, you can use the following websites:
Both the providers are official partners of CIBIL and provide the official CIBIL score.
Word of caution: Any website that offers free CIBIL check has to pay CIBIL money. So why do they offer it to you for free?
Because they can collect your data and offer you loans. People who check their credit scores will usually be looking for loans. So companies treat it as a marketing expense.
Expect SMS and calls with loan offers if you go through any other website that CIBIL’s official site.
Frequently Asked Questions
How to check whether the CIBIL score is authentic?
If you check your score on websites other than CIBIL, make sure that the score comes from CIBIL’s website. Make sure that the website is CIBIL’s official partner.
What to do if there is an error in the credit report?
If you think there is an error in your credit report, dispute it on the CIBIL website.
How long does CIBIL take to resolve my dispute?
CIBIL takes around 30 days to resolve your dispute.
How often should I check my credit score and report?
Ideally, you should check it once every 3-6 months. Frequent checks would make it easier for you to notice any error in your credit report.
Checking the score frequently is crucial for people with low credit scores.
If you are looking to apply for a loan soon, start monitoring at least 6 months before you apply. This would give you enough time to improve your score.
What is TransUnion CIBIL?
TransUnion and CIBIL are the same. In 2016, Transunion bought an 82% stake in CIBIL. The combined entity is called Transunion CIBIL.