Full Form of CIBIL – Credit Information Bureau of India Limited
The full form of CIBIL which stands for Credit Information Bureau of India Limited is a credit rating agency of India which maintains a database of credit-related information of various persons (including individuals as well as corporate) who have availed loans and credit card limit and provides a rating for the creditworthiness of such persons. CIBIL maintains the record based on financial information submitted to it by various financial institutions registered with CIBIL as members on a periodical basis (say monthly).
Why is CIBIL Score Important?
- CIBIL score, which is allotted to a borrower, reflects its creditworthiness. The score is being considered by other financial institutionsFinancial InstitutionsFinancial institutions refer to those organizations which provide business services and products related to financial or monetary transactions to their clients. Some of these are banks, NBFCs, investment companies, brokerage firms, insurance companies and trust corporations. when the borrower approaches them for availing further new loans.
- CIBIL is the most trusted credit rating agency. Its database is highly trusted by the banks and other financial institutions because CIBIL keeps its database updated and reliable.
- The financial institutions refrain themselves from granting loans to such persons who have low CIBIL score or even if they grant the loans, interest rates are kept higher for such persons. In contrast, a person with a good CIBIL score can easily avail of the loans and enjoy comparatively lower interest rates.
How to Check the CIBIL Score?
You can check your CIBIL score by making a login on the official website of CIBIL after filling in basic personal information. Once you log into your account, you will be prompted to make the payment. After making the payment, you can access your CIBIL score and get access to your annual reportsAnnual ReportsAn annual report is a document that a corporation publishes for its internal and external stakeholders to describe the company's performance, financial information, and disclosures related to its operations. Over time, these reports have become legal and regulatory requirements.. In case there is any discrepancy, one may approach the grievance redressal desk of CIBIL.
What are the Benefits of a Good CIBIL Score?
Having a good CIBIL score is important due to various reasons.
#1 – Ease in Availing Credits
It is easier for a person with a good CIBIL score to avail of loans and credit cards as financial institutions consider them creditworthy.
#2 – Lower Interest Rates
The interest rates are lower for persons who have a good CIBIL score.
#3 – Fast Approvals
Taking loans is a less cumbersome and faster process for those having a good CIBIL score as there is less paperwork involved for them.
#4 – Beneficial Offers
Credit cards with exciting benefits, cashback, and gifts are benefits only people with good scores get.
#5 – Higher Limits
Such borrowers can always negotiate for increased limits, and normally, financial institutions do not hesitate to set up higher credit limits for such clients.
Products and Solutions Offered by CIBIL
CIBIL provides the following products and solutions to its members.
#1 – CIBIL Score and Report
You can check your CIBIL score and get access to your detailed report to take corrective actions in the future. A higher CIBIL score gives you higher chances of your loan getting approved.
#2 – CIBIL Rank and Company Report
CIBIL provides businesses to rank on a scale of 1 to 10. The rank nearer to one reflects a good record. CIBIL company record, on the other hand, is a complete summary of your company’s credit history and reflects how responsive the company is in repaying its loans.
#3 – Apply for a Loan
CIBIL provides an online platform for applying for loans and credit cards based on your requirements. You can compare interest rates, fees, credit limits, and other criteria of member banks and other financial institutions and then apply with the member which suits you the best.
What Factors Influence CIBIL Score?
Your CIBIL score is a result of various factors.
#1 – History of Credit Repayment
In case one misses the due dates of payment and make default in repayment of its loans and credit cards, that will negatively impact his credit score.
#2 – Limit Utilization
Utilizing higher levels of the limit will indicate to your bankers and other financial institutions that you are getting burdened with debt and may not be able to repay it on time.
#3 – Requesting for Increased Limits
If you frequently request for an increase in limits, it will again negatively impact your credit score.
#4 – Many Loan Applications
If you make applications for loans and credit cards to various financial institutions simultaneously, it will give an impression to those institutions that you are not creditworthy, and other banks are not willing to give you loans. Avoid filing unnecessary applications.
#5 – High Unsecured Loans
Unsecured loans are riskier and less reliable for financial institutions. A person with more secured loansSecured LoansA secured loan is one where the borrower pledges his/her assets as a collateral to the issuer as a security. In the event of nonpayment of the loan, the issuer has the right to sell or transfer the secured property in order to recover the balance owed. will have a better score.
Difference Between CIBIL Score and CIBIL Rating
As similar as may they sound, CIBIL Score and CIBIL Rating are both different in some sense.
- CIBIL Score is issued to individuals, while for corporate CIBIL rating is issued. CIBIL Score comprises of three digits that ranges between 300 and 900. Ideally, any score above 750 is considered to be a good credit score for individuals.
- On the other hand, the CIBIL rating of companies is given on a scale of 1 to 10, one being the best and ten being the worst. A company can be considered to have a good credit score if its rating lies between 1to 4.
Having a good CIBIL Score is very important. Thus, one should ensure to make repayments of its existing loans and credit cards timely without a default; otherwise, the CIBIL score will decrease. It is important to check your score and get access to your report to analyze what led to that score and take steps for improvement.
This has been a guide to the Full form of CIBIL, i.e. (Credit Information Bureau of India Limited) and definition. Here we learn how to check the CIBIL score, what factors influence CIBIL score, why it’s important, along with benefits. You may refer to the following articles to learn more about finance –