When assessing creditworthiness, two terms are often used interchangeably, but they are not the same: the CIBIL score and the credit score. Actually, the former is a type of the latter. So, the credit score is a more general term, and the CIBIL score is a type of credit score.
Let’s explore these in detail.
What is CIBIL?
CIBIL, or Credit Information Bureau (India) Limited, is the nation’s first credit information firm. It gathers information about credit from banks and other financial institutions to produce credit reports and scores for people and businesses.
Following its acquisition by TransUnion, a leading provider of credit and identity-management services, CIBIL is now known as TransUnion CIBIL.
Before extending credit to borrowers, lenders evaluate the borrower’s creditworthiness using the credit information maintained by CIBIL. The ability to obtain a loan, credit card, or any other type of credit depends on your credit score and credit report, both of which are given by CIBIL.
What is CIBIL Score?
The Credit Information Bureau (India) Limited (CIBIL), which is one of India’s four credit agencies, offers credit scores under the name ‘CIBIL’. It is a three-digit number representing a person’s credit background and creditworthiness.
A person’s credit behavior, as shown in the ‘Accounts’ and ‘Enquiries’ portions of their credit information report, determines their CIBIL Score. The score can be anywhere between 300 and 900, with a score of at least 700 usually regarded as good.
When determining a person’s creditworthiness for offering loans, credit cards, and other financial products, lenders and financial institutions heavily weigh their CIBIL numbers.
What Information is Available in the CIBIL Report?
The CIBIL report includes six sections, which are as follows:
- Credit score: CIBIL calculates your credit score based on your credit behavior as reflected in the ‘Accounts’ and ‘Enquiries’ sections of your CIBIL report. Your CIBIL score ranges from 300 to 900, with a score above 700 generally considered as good.
- Personal details: Under this section, your personal information, including your name, date of birth, gender, PAN number, voter’s ID, etc., are reported.
- Contact details: This section reports your contact numbers and addresses details. It may report multiple numbers and addresses depending on the information gathered from different financial institutions.
- Employment details: This section shows your monthly income, which is reported by banks or other financial institutions.
- Account details: This section provides a detailed summary of the credit facilities that you have availed of. It includes the names of lenders, types of credit facilities (such as home loan, auto loan, personal loan, overdraft, etc.), account numbers, ownership details, dates of opening and last payment, loan amounts, current balances, and a month-on-month record of your payments for up to three years.
- Inquiry details: This section reports the number of times banks or financial institutions have accessed your credit report for verification.
What is the Credit Score?
A credit score is a three-digit number that quantifies a person’s creditworthiness and is based on several variables, including credit history, payment history, credit utilization, and duration of credit history.
Lenders and financial organizations use it to assess a person’s propensity for timely debt repayment. The possible credit ratings are from 300 to 900. A higher credit score typically denotes a reduced credit risk and can lead to better terms for loans, credit cards, and other financial products.
Difference Between the CIBIL Score and Credit Score
Let’s understand the difference between a CIBIL score and a credit score with the following table:
| Criteria | CIBIL Score | Credit Score |
| Definition | A credit score is given by the Credit Information Bureau (India) Limited (CIBIL) to assess a person’s creditworthiness. | A numerical representation of a borrower’s creditworthiness is determined using several criteria, including duration of credit history, payment history, credit history, and credit utilization. |
| Calculation | Determined using an individual’s credit report given to CIBIL by various credit institutions. | The calculation of credit scores considers several variables, including payment history, credit utilization, credit mix, length of credit history, and new credit accounts. |
| Range | Ranges from 300 to 900 | Ranges from 300 to 850 or 900, depending on the credit bureau |
| Credit Bureau | It is one of the four credit bureaus in India, along with Equifax, Experian, and CRIF High Mark. | There are multiple credit bureaus in different countries, such as Experian, Equifax, TransUnion, and others. |
| Authority | CIBIL is a licensed credit bureau regulated by the Reserve Bank of India. | Credit bureaus are regulated by various authorities in different countries. |
FAQs
Are the credit score and the CIBIL score the same?
No, they are not the same. The credit score is a three-digit credit rating given by various credit-rating agencies such as CIBIL TransUnion, Experian, Equifax, etc. The credit rating given by CIBIL TransUnion is known as the CIBIL score.
What is a good credit score?
Each credit-rating agency has different criteria for good credit scores. But generally, a credit score above 750 is considered good.
Which credit score is used by banks?
Multiple credit bureaus issue credit scores, such as Equifax, CRIF High Mark, Experian, and CIBIL TransUnion. In India, most banks prefer CIBIL scores for extending credit.
How to get a 900 credit score?
Building a 900 credit score requires a disciplined approach and takes time. Here are some tips to achieve a 900 credit score:
1. Pay bills on time
2. Keep your credit utilization low
3. Monitor your credit report regularly
4. Keep old credit accounts open
5. Diversify your credit mix
6. Limit your credit inquiries
Does the CIBIL score increase every month?
Your credit score does not immediately increase every month. Nor does your CIBIL score. Your credit score is based on your credit records and payment patterns. Your credit score is likely to rise if you regularly make on-time payments, keep your credit utilization low, and have a healthy mix of credit. On the other hand, your credit score may drop if you frequently apply for new credit, have high credit utilization, and skip payments.
