FAQ On The Credit Score In India.

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If one were to look for an individual's financial report card, as it were, one of the seminal factors which need to be reviewed is his credit history. Credit history, includes but is not limited to, details of loans taken by an individual, in addition to his credit cards, which reveal his track record of payments. It is here that CIBIL score plays a pivotal role in that it is one of the important parameters to gauge your ability to repay a loan or ascertain your creditworthiness.

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What's CIBIL all about?

Founded in 2000, the Credit Information Bureau of India Limited (CIBIL) collects a record of an individual's loans and credit cards. CIBIL, which is ISO 27001:2005 certified, is divided into two divisions, namely, consumer bureau and commercial bureau. The consumer bureau (launched in 2004) has over 260 million records while the commercial bureau (launched in 2006) has over 12 million records. TransUnion International and Dun and Bradstreet are CIBIL's technical partners.

What's a CIBIL score?

Banks, as part of their due diligence process, gauge the creditworthiness of individuals based on credit scores. The information listed on your credit report includes several variables that CIBIL uses to set your credit score. CIBIL score, therefore, reflects the extent of the probability of a default. An individual's credit history is submitted to CIBIL by banks and financial institutions on a monthly basis.

What do high and low credit score determine?

A high CIBIL credit score essentially means less probability of a default. A low CIBIL credit score reflects high probability of a default.

How can you get your CIBIL score?

Log on to the CIBIL website and click on the ‘know your score' tab to get a personalized credit score. Fill an online form which requires you to include details such as your name, date of birth, income, identity proof, address and phone number, in addition to the loans taken by you. Following payment of a certain sum, you will have to submit authentication details which include questions based on your credit history. After authentication, your credit score will be emailed to you.

Will checking your score have negative repercussions?

Experts suggest checking one's CIBIL score once a year. The practice is often considered a ‘soft inquiry' as opposed to credit card issuers asking CIBIL for your score, known as a ‘hard inquiry' (mentioned in the ‘enquiry section' of your report). Also, if you apply for a loan with various banks at the same time, it will result in hard inquiries which may have a negative impact your score.

Will opting for a credit card decrease my score?

If you have a zero outstanding balance on your old credit card, there is no reason to unduly worry about it and close it. If you have a credit card with a clear payment history, it will not only reflect your responsible credit behaviour but also keep your utilization rate low, which impacts your score positively.