Distinction Between CIBIL Rating and Credit Score:
The term 'credit score' is a globally recognised numerical representation of a person's creditworthiness, used by lenders to assess the risk of extending credit. In India, however, the CIBIL score holds a unique significance.
CIBIL, the Credit Information Bureau (India) Limited, is the first credit information firm in India. Established in the country, CIBIL generates the CIBIL score, a type of credit score specific to India. This score, ranging from 300 to 900, is used by Indian banks and financial institutions to evaluate a borrower's creditworthiness.
Unlike general credit scores issued by various bureaus worldwide, the CIBIL score is based on data from various lenders within India. It takes into account a person's credit history, repayment behaviour, and other factors, all of which are specific to the Indian market.
The CIBIL score is composed of six sections: Personal Information, Account Information, Payment Information, Enquiry Information, Account-wise Repayment, and Analysis and Recommendations. Each section provides a detailed summary of the credit facilities availed, including names of lenders, types of credit facilities, account numbers, ownership details, dates of opening and last payment, loan amounts, current balances, and a month-on-month record of payments for up to three years.
The Enquiry Details section reports the number of times banks or financial institutions have accessed a person's credit report for verification. Personal details, including name, date of birth, gender, PAN number, voter's ID, etc., are reported under the Personal Information section. Contact numbers and addresses are reported under the Contact Details section, while employment details, including monthly income, are reported under the Employment Details section.
Lenders and financial institutions heavily consider a person's CIBIL number when determining their creditworthiness for loans, credit cards, and other financial products. A score of at least 700 is generally considered good, indicating a low risk of default. Building a 900 credit score requires a disciplined approach and takes time, with tips including paying bills on time, keeping credit utilization low, monitoring credit reports regularly, keeping old credit accounts open, diversifying credit mix, and limiting credit inquiries.
With its acquisition by TransUnion, CIBIL is now known as TransUnion CIBIL, but the significance of the CIBIL score remains the same. It continues to be a crucial factor in determining a borrower's creditworthiness in India, making it essential for individuals to maintain a good score for access to affordable credit and financial opportunities.
[1] CIBIL Report: A Comprehensive Guide to Your Credit Health. (n.d.). Retrieved from https://www.cibil.com/credit-education/cibil-report [2] CIBIL Score: What is it and how is it calculated? (n.d.). Retrieved from https://www.creditmantri.com/cibil-score [3] CIBIL Score vs Credit Score: What's the Difference? (n.d.). Retrieved from https://www.bankbazaar.com/blog/cibil-score-vs-credit-score-whats-the-difference/ [4] What is a CIBIL Score? (n.d.). Retrieved from https://www.moneycontrol.com/news/business/what-is-a-cibil-score-and-how-is-it-calculated-4671201.html
Here are two sentences that fit within the context of the given text, containing the words 'credit score', 'finance', and 'personal-finance':
- In India, maintaining a high CIBIL score is crucial for securing favorable finance and personal-finance opportunities.
- The CIBIL score is an important factor in assessing a person's creditworthiness, playing a significant role in the global personal-finance and finance industry.
