News and Updates

ABOUT CIBIL

One does have come across the term Cibil score when applying for a loan or credit.

Now, what is cibil score to simplify it is a credit score that is given to one based on their track of repayments made in the previous borrowings. or to say it shows how well the borrower is with their finance.

TransUnion CIBIL Limited (formerly Credit Information Bureau (India) Limited) was incorporated in the year 2000 on the recommendation of made by RBI and adhere to the Credit Information Act 2005.

They collect individuals and businesses repayment records from the lending firm or banks monthly and prepare reports.

Such reports are known as Credit Information Report (CIR) based on which a credit score is generated which is then used by the lenders in the loan evaluation process.

Whether it would be an individual or a business firm when they apply for credit or loan the first thing that the lending firm let say a bank or NBFC’s goes through is their Cibil score.

This credit score is nothing but a numeric summary of one’s repayment history. It’s value ranges from 300-900.

So, the higher the score more applicable chances to get the credit or loan.

While lending a loan or credit a bank or any lender looks for various factors of the borrower like income, liability, assets, and credit score.

Of these, the credit score plays a vital role.

For an individual, it is termed as a Personal credit score and for a business firm termed as a Business credit score.

Let say for an example there are two persons A and B. A having a monthly income of 1lakh and B have a monthly income of 50 thousand, however because of default in transaction history the cibil score of A is pretty less (300-500) and because of a well-managed and timely transaction of B his cibil score is good (600-750)  then if both apply for a loan or credit then B’s chances of getting it is better than A.

The same goes for a business firm when they apply for loans or credit.