Every day, while scrolling through our gadgets, we encounter many terms that might be confusing to understand. The same misunderstanding might happen between a credit score and a CIBIL score, especially when you are new to growing your credit. Even though they both sound similar, they are vastly different in terms of their work and purposes.
Let’s dive into this article and read through what exactly these terms mean with their function and how they differ from each other.
What is a Credit Score?
A credit score is simply a three-digit numeric representation of your credit history, from 300 to 900. Credit rating and past payment behavior reflect your creditworthiness that you have duly paid off your financial obligations on time.
A good credit score is significant in getting an approved loan or credit request. These days, taking out an instant personal loan has become easier with a pool of lenders.
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What is a CIBIL Score?
CIBIL is a common abbreviation for Credit Information Bureau (India) Limited. It is one of four primary credit bureaus in India, and the other three bureaus are Equifax, CRIF Highmark, and Experian. The Reserve Bank of India (RBI)has granted all these four credit bureaus licenses.
The CIBIL score refers to the credit score calculated by CIBIL. It is a component of a credit report that shows how people and businesses handle interest and principal payments. However, most banks and money lenders prefer CIBIL scores.
Let’s dig deeper into understanding how a CIBIL score works and explore how different it is from a credit score.
How is your CIBIL Score Generated?
CIBIL report generates your CIBIL score using the information of previous loans and credit card dues and how you had repaid them.
It contains your personal information, such as your name, address, Permanent Account Number (PAN), contact information, and debt-related information. If you apply for a loan or credit card, the lender notifies CIBIL, and all these details are there in your CIBIL report. The other three credit bureaus, like CIBIL, also offer their credit reports.
How can you check your CIBIL Score?
To check your credit score on the CIBIL website, you can do so for free or purchase a membership plan. You can view your current CIBIL Report once a year with a complimentary subscription. CIBIL has paid programs that give you access to various extra features, depending on which you choose.
Let’s look at what necessary steps are involved in checking your CIBIL score.
- First, you need to visit the official CIBIL website and click on the “Know your score here” tab.
- After logging in, fill up the online form asking for personal details such as name, date of birth, address, ID proof, past loan history, etc.
- After successfully filling out the form and agreeing with the declarations, it redirects to the payments page. You can choose from multiple modes of payment such as via credit cards, net banking, UPI, etc. Generally, checking your CIBIL score from the website of CIBIL score will cost you an amount of Rs. 400 to 500 to get your online credit report.
- After completing the successful payment, you will see an authentication page. To confirm your identification with CIBIL, you have to answer five questions about your credit history, at least three of which you must respond adequately.
- If the authentication fails, you can refill the form and send a hard copy of the application to CIBIL through the mail. You will later receive the report by mail.
Apart from the CIBIL website, you may also check your credit score on many banking services aggregator websites. Before approaching any bank or lender for a loan, it is prudent to check your score. You can check your credit score for free in no time by visiting Buddy score.
Is Credit Score and CIBIL score the same?
For loan applicants, credit scores and CIBIL scores can be a bit tricky to understand about how they differ from one another. Many people have this confusion that these scores are the same. To burst this bubble of doubt, you need to know about this significant difference between a credit and CIBIL score.
The main distinction between a credit and CIBIL score is that all four bureaus obtain a credit score. But only CIBIL generates a CIBIL score. Although, scores from any of these four are equally acceptable and are valid.
While the information offered by a CIBIL score, credit report, or credit rating may differ, they all serve the same purpose. Moreover, these parameters are all trustworthy sources of information about a borrower’s creditworthiness.
Having a fair knowledge of credit scores and CIBIL scores is essential for any individual to make future inquiries pleasant. However, you can always seek guidance from experienced financial advisors and experts in this regard and make a firm decision.
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People Also Ask:
Q. What is a CIBIL report?
A. CIBIL report is a detailed record that contains information about your CIBIL score, debt accounts, and payments.
Q. Is a credit report and a credit score the same?
A. A credit score is a three-digit numeric representation of one’s credit rating based on their past credit history. At the same time, a credit report is a digital tabulation of this information that reflects their financial health.
Q. What is a standard credit score?
A. A standard credit score is between 700 to 900, which helps you achieve instant loan approvals at low-interest rates.
Q. Which score do banks use?
A. Many banks and NBFCs use the credit score provided by CIBIL, Experian, and Equifax bureaus to evaluate the risk involved in lending.