CIBIL Score and Its Importance

The CIBIL score is one of the most important factors that define our financial future as it determines your reliability and risk assessment, and portrays your creditworthiness to lenders.

But what exactly is a good credit score? Let us look at what a good CIBIL score is, its importance, and more.

Importance of Good CIBIL Score

The CIBIL score is a crucial financial factor. The Importance Of CIBIL Score is illustrated below.

Banks, NBFCs, and other lending institutions(online and offline) use credit scores to evaluate the creditworthiness of the borrower. It depicts your ability to repay borrowed credit and specifies how much of a risk you pose to the lender.
A higher CIBIL score indicates a responsible borrower and a guaranteed return on the loaded amount. Similarly, a lower CIBIL score indicates a risky borrower who may default on the loan.
While each lender has different criteria to determine the eligibility of the borrower, a high credit score is what every lender looks for. Hence, maintaining a high credit score will help you avail a loan at any lending institution with favorable terms and lower interest rates.
A score of 750 and above is considered excellent and will help you get a loan easily on your requirements, with minimal paperwork, fast approval, lower interest rates, and negotiable terms.

A high CIBIL score offers several advantages. Know all about the benefits of a higher score with moneyview.

What is a Credit Score?

A credit score is a summary of the borrower’s credit history that includes their borrowing habits, spending limits, repayment patterns, loan-seeking rates, and more.

A credit score of 700 and above falls in the good rating category. Lenders generally favor borrowers with good credit ratings as they are more likely to repay the borrowed amount.

Key Factors that influence your credit score -

Length of credit history
Repayment behavior
Credit utilization ratio
Debt to income ratio
Credit mix
Outstanding debt
Multiple credit applications

To know more about the factors influencing CIBIL score

Based on the above factors and more, your credit score is determined.

This numerical representation of your creditworthiness allows lenders to assess your borrowing candidature and serves as an indicator of how likely you are to repay the amount borrowed within the stipulated period.

Note: The CIBIL score is the most commonly used credit score in India. Hence CIBIL score and credit score are the same and interchangeable.

CIBIL Score: Range & Rating

TransUnion CIBIL is the primary credit information bureau operating in India. The score the CIBIL bureau assigns to each borrower depending on their profile is known as the CIBIL score.

The CIBIL score is a three-digit number that ranges from 300 to 900, with the risk factor decreasing as the score increases.

Here is an overview of CIBIL score ranges, its rating, and what it means to the lender.

Credit score	Grade	Meaning
NA/NH or (CIBIL score -1)	‘Not Applicable’ or ‘No History’	You may have never used a credit card or taken out a loan, resulting in the absence of a credit history.
Zero	Not enough credit history	If your CIBIL record is less than six months old, your credit score will be zero, as the credit bureau lacks sufficient information to assess your credit history and assign you a credit score. Even if your CIBIL credit score is zero, it is possible to get loans from a few lenders, with strict terms and high interest rates.
300-549	Poor	If you have a record of irregular repayments or defaults on credit card bills or EMIs, lenders will view you as high risk for loan defaults. As a result, your loan and credit applications may not be approved.
550-649	Fair	If you have demonstrated some inconsistencies in your past payments, such as late payments, you may still be perceived as a risk by lenders. Many lenders may decline your loan applications, and those who do approve may offer higher interest rates.
650-749	Good	Your past repayment behavior indicates responsible financial management. Lenders will view you as a lower risk of defaulting on loans. Most lenders will consider your credit and loan applications, although you may not qualify for the most favorable interest rates.
750-799	Very good	Your consistent credit payments, longer credit history, and responsible repayment behavior position you as a low risk for lenders. Lenders will be more comfortable extending credit to you, and you will receive favorable loan terms.
800-900	Excellent	Your exceptional financial management, regular credit payments, and outstanding credit history make you an ideal candidate for banks and lending institutions. They will perceive you as a minimal risk of default and offer you the best deals on loans and credit cards.

If you wish to know how to improve your credit score or how long this process takes, check out our article How Much Time Will It Take To Improve CIBIL Score?

Check CIBIL Score with moneyview

Now that you know the significance of credit rating, it is also essential to regularly track your credit score to ensure you are credit-worthy and financially sound. Here is how you can check your score in just 2 minutes.

Go to the moneyview credit tracker
Log in using your mobile number, agree to the terms, and click on “Get Score & more”
Verify your mobile number through the 5-digit OTP sent to your mobile number
Provide necessary details as PAN
The page will display your credit score instantly

Conclusion

A higher credit score indicates a responsible credit history and a risk-free borrower. CIBIL score is the first impression for the lender and an excellent score instills confidence in potential lenders when assessing your credit application. Additionally, it makes way for lower interest rates, flexible repayment tenures, expedited loan approval processes, and overall negotiable terms on the loan.

Generally, a score of 750 and above is considered creditworthy by all lenders. However, few lenders also regard a score of 650 as good. The rating of the CIBIL score changes depending on the lender and their criteria.

Can I Check My CIBIL Score For Free?

Yes. you can check your CIBIL score for free using the moneyview credit tracker. There is no charge for checking your score any number of times.

What Factors Affect Your Credit Score?

There are several factors that affect your score. The key influencing factors are

Your payment history
Amounts owed
Length of your credit history
Credit mix
New credit
Credit utilization ratio
Multiple Credit Applications
Repayment history
Errors in the CIBIL report

How Can I Improve My Credit Score?

You can improve your credit score over time using the following techniques.

Pay your credit dues on time
Keep your credit utilization ratio low
Maintain a healthy credit mix
Regularly check your credit report
Keep your old accounts open

Is 619 a good credit score?

619 is considered a fair score which is neither poor nor excellent. It can, however, get you loans from a few lenders even though the credit comes with higher interest rates and rigid terms.