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What Is CIBIL Score - Credit Score Limit: Meaning and Impact

cibil full form

When you apply for a loan, you must fulfil the lender’s minimum CIBIL score requirement. You can easily check your CIBIL score online by using your PAN number. However, before that, you must know what is CIBIL score, its full form, and why it holds so much importance for your loan application. The full form of CIBIL is Credit Information Bureau (India) Limited, the top credit bureau of India evaluating the credit behaviour of each Indian credit user. Let's learn more about the CIBIL meaning, what is the CIBIL score limit, and its impact on your loan eligibility.

What is CIBIL Score?

CIBIL score is a 3-digit number ranging from 300 to 900. This numerical represents your credit history based on how you have handled credit in the past. The more responsibly you behave and repay your lenders on time, the higher the CIBIL rating you can build.

Whenever you apply for new credit, the finance company checks your credit report and evaluates your credit history to determine your creditworthiness. Your average credit score is based on your repayment history, portfolio diversity, credit age, outstanding balance, current accounts, etc.

What is the CIBIL Score Limit?

Credit score ratings range from 300 to 900. The minimum CIBIL score limit is 300, and the maximum is 900. Lending institutions set CIBIL score limits based on their eligibility requirement. For instance, some loan providers set the minimum CIBIL score limit at 750, which means they only accept applications from loan seekers with a CIBIL score of at least 750. However, if your average credit score is low, you can still apply for a loan if you can prove a good income, a stable job, and a high repayment capacity.

In short, know the real CIBIL score meaning and its impact on your creditworthiness before applying for a loan.

How is CIBIL Score Calculated?

CIBIL calculates credit score ratings based on your creditworthiness and past credit behaviour. It has unique statistical algorithms to calculate the CIBIL rating using the following steps:

  • Your financial institution shares your credit information with the credit bureaus like CIBIL each month.

  • CIBIL collates this information to create your credit report.

  • Based on factors like your repayment history, outstanding balance, debt-to-income (DTI) ratio, credit utilisation rate, etc., the credit bureau calculates your CIBIL rating.

  • Although you can fetch one credit report each year for free, you will need to pay to get regular credit reports.

Ways to Check Your CIBIL Score Online

Just like individuals can check their CIBIL scores online, business owners can check their business credit scores online. CIBIL provides one credit report a year for free. You must pay or subscribe to their one, six, or twelve-month plans to get regular reports. These are the steps to check your CIBIL score online:

  • Log on to the official website of CIBIL

  • Select 'Get your CIBIL Score’

  • Log in using your username and password

  • Enter details like your name and email ID

  • Attach an ID proof, enter your phone number and PIN code

  • Click on 'Accept and continue’

  • Enter the OTP you will receive on your mobile number

  • Select 'Continue'

  • Verify Your Identity

  • Go to dashboard

  • Click on ‘Check your credit score.'

  • View your CIBIL Score

Also Read: What is CIBIL Report - CIBIL Meaning and Calculation
 

CIBIL Score Range

Various CIBIL rating ranges defining the levels of your creditworthiness are as follows:

CIBIL Score

Implication

Effect on Loan Eligibility

750-900

Excellent score

Highest chances of loan approval

700-740

Good score

Good chances of approval

650-699

Fair score, lenders may conduct additional queries and formalities

Possible chances of approval

600-649

Average score, makes lenders doubtful

Difficult chances of approval

Less than 600

Poor score, needs attention

Low chances of approval

What is Considered an Average Credit Score?

A credit score between 650 and 699 is considered an average score. While most lending institutions have a minimum credit score limit of 750 or above, they may accept applications from individuals with an average credit score. However, such borrowers must prove income regularity and professional stability. Since loan providers charge the lowest interest rates from high-score borrowers, those with an average credit score may pay a higher interest rate on their loans.

 

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What Does Credit History and Credit Report Mean in CIBIL?

Both credit history and credit report are different aspects in terms of credit. Let’s see what they are:

  • Credit history is a crucial factor lending institutions use to calculate your credit score. Since your financial institution shares each credit-related activity of yours with credit bureaus like CIBIL every month, they use this information to create your CIBIL or credit report and assign you a credit rating. Your credit history includes your credit behaviour in the last few years, including your repayment habits, credit accounts, outstanding balances, etc. A credit score of 0 means you have never used credit and have no credit behaviour to show.

  • The credit report is the record of your credit activities. It is a paper or digital document that contains records of your credit accounts, repayment history, types of loan accounts, etc. The credit bureau calculates your credit score based on information in your credit report.

Important Factors for Your CIBIL Report

CIBIL uses several important factors to create your CIBIL report and calculate credit score ratings. These include the following:

  • Repayment History: Your repayment history depends on whether you repay your debt on time.

  • Credit Utilisation and Balance: The credit bureau determines this factor based on your total available credit limit and how much you have used from it. A less than 30% credit utilisation ratio is favourable for a good credit score.

  • Credit Duration: It refers to your credit age and duration of repayment. If you have handled credit responsibly in the past, it will positively affect your credit score average.

  • New Credit: Each CIBIL enquiry impacts your credit score. Too many enquiries within a short period indicate that you are in a financial crunch and direly need credit to fulfil your regular expenses.

  • Credit Mix: Having a healthy credit mix is always important. So, know your CIBIL score and keep a balance of secured and unsecured loans for both short and long terms to build a good CIBIL rating.

Importance of Credit Score Limit to Applying for a Loan

It's essential to know your CIBIL score before applying for a loan. When you apply for a Personal Loan online, lending institutions check your individual or business credit score to measure your creditworthiness. The credit score scale is important to apply for a loan due to various reasons, including the following:

  • To check your past credit record and history

  • To see if you are capable of repaying your debt

  • To understand your risk profile by reviewing your credit balance

  • To measure your loan eligibility and qualification

  • To determine your loan amount and interest rate

Conclusion

Now that you know everything about CIBIL score limit and implications, handle your financial activities smartly and ensure a consistent repayment history. Try keeping your CIBIL rating high to access funds easily on your terms. Considering your financial profile and CIBIL score, Hero FinCorp can offer the best financial products when you apply for a Personal Loan online. Also, remember to check your credit score online regularly to stay on track and act accordingly.

FAQs

What is the full form of CIBIL?

CIBIL is the oldest credit bureau monitoring the credit activities of Indian individuals. The full form of CIBIL is Credit Information Bureau (India) Limited.

What does a 700 CIBIL score mean?

A 700 CIBIL score is good for obtaining loans from most lending institutions. However, the lender may demand additional documents or formalities to approve such loans.

What are the CIBIL score benefits?

A high CIBIL rating helps get easy loan approvals at competitive interest rates and favourable terms and conditions. Check it regularly to act on time and maintain it at a high level.

What's a good average credit score?

600-649 is a good average credit score that may attract loan approval but at a higher interest rate. Maintain it above 750 to get a loan with the best terms.

How can I boost my credit score in 30 days?

Increasing the credit score takes time. However, rectifying any mistakes in the credit report, paying off outstanding balances, and reducing your DTI and CUR are the best ways to boost your credit score in 30 days.


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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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