CIBIL (CREDIT INFORMATION BUREAU OF INDIA LIMITED ) was formed in a joint effort of Govt Of India & Reserve Bank of India to improve Indian Financial Industry and also to help Indian financial institutions (Banks & NBFCs) for building up a good portfolio. In this post, we will share the role of CIBIL, how to generate Free CIBIL score, and Tips for maintaining good CIBIL score.
Role of CIBIL & its participant Banks or NBFCs
CIBIL has created an account for every individual & Business entity who has taken any Loans or Credit Facilities. The loan can be in the form of Housing Loan, Car Loan, Personal Loan, Business Loan, Credit Card, Cash Credit Account, Overdraft Account. It can also be in sort of Term Loan from its Participating Banks or NBFCs. Performance tracking of those loans is regularly shared to CIBIL by all those financiers. Here performance means how regular is the person or business is at paying the loan.
Whenever a person/ Entity apply for new Loans or Credit Card to a Financial Institution, they generate the CIBIL report of the said person or concern. It helps them to judge the creditworthiness of the person and also to verify existing track record. Basis performance of payment track record, CIBIL also generates “Score, “ which is followed by the financiers as well before lending. Scores above 750 considered to be good from the lending perspective as confirmed through sources from various Banking officials.
Though it is now only used by Banks and NBFCs, In the long run, there is a high probability that this might be used by Post-paid telecom service provider or any other Business where there will be a lending Risk involved.
How the CIBIL effect or Help individuals?
CIBIL Score is a three-digit numeric summary of your credit history & ranges from 300 to 900.
In the current social scenario, we are very much accustomed to using Credit Cards. Some of us have credit cards of 3 to 4 Banks. If for any reason one forgets to pay the full bill on time, it will hamper your CIBIL Score, especially if one repeats it several times.
Then next time when you apply for any Loans, there is a high probability that your application also might get rejected because of poor credit track record.
How to generate Free CIBIL score?
If you want to generate a CIBIL score once in a while, the service is free. However, if you’re going to create for many other people, you need to pay. So if you want to generate free CIBIL score for yourself, follow the steps below:
- Go to the CIBIL website
- Fill out the provided form that requires your necessary information such as name, contact number, email address, phone number, PAN card, or any other id.
- Next, you will be prompted to provide an OTP which will be sent over your phone number.
- Once verified, you can log in to your computer, and go to the dashboard.
- Once you submit that form your dashboard will be revealed with your CIBIL score.
CIBIL Score is a three-digit numeric summary of your credit history & ranges from 300 to 900. The higher the score, better, will be your credit score. If you want to know if someone else has inquired about your CIBIL score, go to CIBIL > Credit Report > Enquiry Information.
Some Important TIPs one must do to maintain a good CIBIL score
- Make a note of Payment date at the beginning of the month for all Loans, Credit Cards, etc.
- Make Payment of all EMIs at least before 7 Days of the due date if to be paid by cheque.
- After depositing the cheque, observe clearance from Bank account as well.
- Replenish or Submit your Post Dated Cheques to the financiers (Long Term Loans Eg. Home Loans) before exhaustion of earlier sets.
- In case of any dispute with a financier, try to sort out the issue within a short period. Keep all correspondence appropriately documented for future record.
These tips will help you prove your creditworthiness in the future. For any problem, please visit Cibil.com