If you use a credit card, you probably know why your credit profile is important. Just like in the US, India too has credit profiling and credit checks done these days.
In India, Credit Score (CIBIL Report) is done for mainly profiling customers. Say when you are applying for a loan, every company or lender will check for your credit score. And a low score will impact your loan and credit card eligibility. Maintaining a good credit score is always good and recommended and a credit report from CIBIL will help you understand where you stand in terms of your credit score.
In India, credit score is provided by 3 credit bureaus of the RBI. The 3 credit bureaus are CIBIL, Equifax and Experian. In USA, it is Experian and TransUnion. In India, among the three bureaus, CIBIL is more popular since they have been around for a longer period of time. Lenders such as banks and NBFC’s use the credit score (be it CIBIL score, Equifax Score or Experian score) to value the potential risk posed by every new customer (applicants). The lower your score, the less chances you have to get a loan sanctioned. Lenders use this CIBIL score to determine who is eligible to avail loans and credit limits.
Your CIBIL score is a 3 digit number and the CIBIL score ranges from 300-900. 900 is considered the best score, although very few people have it. If you don’t have a credit history, your CIBIL score will be -1. If you have a credit history of just 6 months, your CIBIL score will be 0. It usually takes 18-36 months to build your credit history and it is important for everyone to build your credit history.
There is a free online service that will help check your credit score by generating a free credit report from CIBIL. Check it out here.
It’s a fairly straight forward process, where you fill in your details and the service gets you your CIBIL score. If your score is low, you can use it to improve in the next couple of months and prepare better when applying for loans or other credit cards. Why know it yourself before getting shot down after submitting your application?