What is CIBIL Score and why is it important?

March 03, 2019


From your income, occupation, work experience, to your age, there are a lot of things that loan and credit card providers in India take into consideration before approving your application. While these factors are very crucial too, your CIBIL score is probably the most important.

Even if you do meet all the other eligibility requirements of a bank, it is very much possible for your loan or credit card application to be rejected if you have a poor credit score. But what is this CIBIL score? Why is it so important for every borrower?

If you are planning to apply for a loan or credit card for the first time, here are some important details about CIBIL rating-

What is CIBIL Score?

The Credit Information Bureau (India) Limited or CIBIL is a credit information repository. The banks and credit card providers in India are its members. These members share the account information of its loan and credit card customers with CIBIL.

With the help of this information, the bureau works out a 3-digit numeric summary of an individuals credit history. This score ranges between 300 and 900.

Importance of CIBIL Score

Your credit history is taken into consideration for CIBIL score calculation. CIBIL uses its proprietary algorithm for this calculation. But the most important components of this calculation is how you have treated credit such as loans and credit card bills in the past.

The CIBIL score is important as this allows banks to only offer loans and credit cards to people with a good credit history. Giving credit to someone with a good credit score helps them ensure that the credit is given to someone who handles credit responsibly.

This allows them to carry a lower amount of credit risk as compared to giving a loan to someone who has a poor credit history and might not repay the loan on time.

Good and Bad CIBIL Score

So, what is good CIBIL score? It is generally said that the closer you are to 900, the more creditworthy you are in the eyes of lenders and credit card providers. Most banks prefer customers whose credit score is at least 700 or above.

Individuals with a credit score of 650 and below are known to face difficulties in getting loans and credit cards.

Benefits of good CIBIL score

If your CIBIL score is 700 or above, your loan and credit card applications would be processed faster than someone with a lower credit score. Moreover, the high score also makes you eligible to negotiate a better deal with the credit provider.

For instance, if you are taking a home loan, you can use your high CIBIL score to get the loan at a lower interest rate and save lakhs of rupees in the process.

Checking CIBIL score

How to check CIBIL score online? Checking your CIBIL score is now easy and you can do it from the comforts of your home or office. Simply visit the official CIBIL website and you can get your CIBIL report for free once in a year. You can also get unlimited access to your CIBIL report by purchasing a membership.

Improving your credit eligibility with CIBIL score

As banks now lay major emphasis on the credit score of an applicant, it is important to check your CIBIL score before applying. Note that multiple rejections from banks can also negatively affect your credit report.

Now that you know what is CIBIL score and its importance, look for ways to improve your score and be more creditworthy.




The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.