CIBIL Score Calculation and Classification

How is your CIBIL Score Determined?

Credit bureaus typically evaluate six major factors while calculating your CIBIL score including all the credit inquiries, credit utilization, current loans, repayment history, loan type, and term, and repayment history The greatest weight is usually given to repayment history, current debts, and credit utilization when calculating a credit score.

CIBIL Score not Getting Generated?

It might be for a variety of causes. TransUnion recognizes you and your records based on the information in your financial records. You frequently submitted this information to banks a long time ago. Phone numbers, residences, and work information change over time but are frequently not updated in your financial records. And if there is a discrepancy with your financial data, CIBIL will not provide you with your score since it cannot identify you with sufficient assurance. In such instances, it is recommended to go over all of your financial documents and contact CIBIL. If there is an error, only they can correct it.

Significance of CIBIL Score

Your credit score is an indicator of your financial situation. When you check your score and report, you’ll be able to understand where you are and what concerns you need to address. Your CIBIL is a report that summarises your current and prior credit actions. Monitoring your report can also help you report and rectify any discrepancies that led to a lower score.

Most financial organizations and lending platforms consider a CIBIL score of 750 or more to be acceptable. As a consequence, keeping a credit history and acquiring a credit score is critical since it allows you to qualify for loans with favorable terms. Lenders have a difficult time determining your creditworthiness if you have no credit history or score.

CIBIL Score Classification

The CIBIL Score is a credit score created by TransUnion that is approved across the country. It is a number that spans from 300 to 900. Where the score is as excellent as it is close to 900. Individual credit scores are issued by credit bureaus and are thus categorized into numerous categories. In India, the Free CIBIL score categories are as follows:

Credit Score of 800 or above:This is normally regarded as an excellent credit score, and it indicates that the lender is likely to provide you with the best potential interest rate on a loan. This group of applicants is most likely to have the lowest interest rates levied by banks on their loans.

Credit Score between 740 – 799:This is considered a very strong credit score, and banks are eager to supply you with a low-interest loan since you are viewed as a low-risk applicant.

Credit Score between 670-739:Although a credit score in this group is deemed acceptable, banks consider you a moderate risk candidate and hence give you a loan with significantly higher interest rates.

Credit Score between 580-669:Banks consider these scores to be a high-risk candidates and are likely to charge a very high-interest rate, with the possibility of a bank rejecting their application.

Credit Score below 580:Anything less than 580 is considered a bad credit score, and candidates in this category have a very low chance of getting their loan application accepted by any bank.

Credit Score between 1-5:- When a borrower’s credit score is less than 6 months old, a CIBIL score of 1 to 5 are displayed. This reflects the degree of risk that a lender may face when lending to a new borrower, with 5 denoting a lower level of risk and 1 denoting a larger level of risk.

Credit Score is Zero or Negative:- A credit score of zero implies NH (No History), whereas a negative score suggests NA (Not Available).

 

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