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CIBIL – Overview, Importance and Product Offers

  • Rudri Rawell
  • Oct 12 2021
  • 7 minutes
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TransUnion CIBIL Limited was established in 2000 and was formerly known as Credit Information Bureau (India) Limited. It happens to be India’s first credit information agency. This credit bureau collects and retains credit-related information of borrowers, both individual and business, related to loans, credit cards, and other credit formats. CIBIL collects these records from member institutions on a periodic basis and uses them to create credit reports and calculate credit scores. 

CIBIL has a database of credit information of all borrowers in the country. The credit agency is not authorised to make any lending decisions on behalf of banks. It only provides data to banks and other financial institutions, who use it to filter applications for loans and credit cards.

Overview of CIBIL’s history

TransUnion CIBIL Limited was established in Mumbai, Maharashtra. The credit bureau’s key milestones are as below:

  • 2000 – As per recommendations of the RBI Siddiqui committee, TransUnion CIBIL Limited was established.
  • 2004 – The credit agency’s services were launched for the first time in India.
  • 2006 – The agency expanded its commercial operations.
  • 2007 – India’s first risk scoring model was set up for financial institutions, also known as the CIBIL score.
  • 2010 – Launch of CIBIL Detect, India’s first information repository related to high-risk activities and CIBIL Mortgage Check, India’s first centralized mortgage database.
  • 2011 – CIBIL Score for individual consumers was launched.
  • 2016 – TransUnion takes up 82% stake in CIBIL and re-branded as TransUnion CIBIL.
  • 2017 – CIBIL MSME ranking launched by TransUnion CIBIL for credit penetration in MSME sector. TransUnion extended its stake in CIBIL to 92.1%.

The Credit Information Bureau (India) Limited (CIBIL) is one of the oldest and most established credit bureaus to be licensed by the Reserve Bank of India. The three other agencies licensed by the RBI for credit information are Experian, Equifax, and Highmark. In India, CIBIL enjoys higher popularity among lenders for availing credit scores and reports of borrowers. 

How does CIBIL function?

TransUnion CIBIL gathers data from financial institutions like banks & Non Banking Finance Companies every month. This data encompasses primarily loans and credit card payments of borrowers. As per the information provided, CIBIL generates credit reports and credit scores of borrowers and further passes it on to lenders for determining financial health of these borrowers. 

What are the product offerings of CIBIL?

CIBIL is known to offer three key products:

  1. Credit score
  2. Credit report for individuals 
  3. Credit report for companies

Here is a detailed explanation of each of these products:

1. Credit score

A credit score is a 3 digit number that represents an individual or business’s creditworthiness. This number can range from 300 to 900, 900 being the highest and 300 being the lowest. A credit score is computed using the credit history of a borrower. Banks and financial institutions consider an applicant’s credit score before r extending credit. Borrowers with a credit score of 750 and more are preferred since a good credit score indicates less likelihood of default on loan repayments or credit card dues.

2. Credit report for individuals

A credit report for individuals contains information on credit history, credit performance, credit score, etc. that is available to CIBIL from various banks and financial institutions in the country. It has information on an individual’s borrowing history and repayment track record, including any loan defaults and payment delays. Some of the important components of a credit report are credit score, personal information of borrowers such as employment details, contact details and also account details.

3. Credit report for companies

The credit reports for companies contains a company’s credit history, including existing credit, any pending lawsuits, outstanding loans, etc.

A credit report can influence the approval of any loans or borrowings. A poor credit report could easily damage the chances of easily securing a loan by an individual borrower or a business.

Additional read – What is Minimum amount due on credit cards?

What is a CIBIL score?

CIBIL score is a 3-digit numerical representation of a borrower’s credit history. It ranges from 300 to 900. The closer one’s CIBIL score is to 900, the better and preferred the credit rating.

CIBIL maintains credit records of more than 600 million individuals and nearly 32 million businesses. In India, credit scores are referred as CIBIL scores.

Why is CIBIL score important?

CIBIL score is a very important aspect that is considered by most lenders in any loan application process. When a borrower approaches a bank or a lending institution for a loan or credit card, the lender checks the applicant’s CIBIL score and credit report. In case the CIBIL score is low, the lender may not process the application. For high CIBIL scores, lenders will consider the application and other details while determining the creditworthiness of the borrower.

A CIBIL score is used by lenders to gauge the first impression of any borrower. The higher the CIBIL score, the better one’s chances of easily securing a loan. Although lenders consider CIBIL scores, the decision on granting a loan or credit is solely dependent on the lender.

CIBIL reports and scores play a very crucial role in one’s financial journey. These determine the eligibility of individuals or businesses while availing a loan or a credit card. Financial institutions may be willing to approve higher credit limits to borrowers who have a good credit score and report. CIBIL score also influences the interest rates applicable to loans. A high CIBIL score can fetch lower interest rates and allow borrowers to negotiate with lenders in this regard.

How does CIBIL use credit history in credit reports?

Credit history is a complete track record of a borrower’s repayment of past debts. A credit report generated by CIBIL will keep a record of the borrower’s credit history. Credit history is essentially gathered by CIBIL from various sources, including banks, credit card companies, collection agencies, governments, etc. 

CIBIL uses a borrower’s credit history to incorporate various elements in credit reports, such as the borrower’s creditworthiness, credit behaviour, credit using pattern, and overall credit standing.

Conclusion

If you wish to achieve your financial goals as per pre-determined timelines or even in case you have an emergency, you may require some form of credit. Regularly monitoring your CIBIL score and credit report to work towards a good credit track record will allow you easy access to credit. Therefore, start working towards your credit score at the earliest by starting with accessing your CIBIL score and detailed CIBIL report.

FAQs

Is CIBIL a government authority?

No, CIBIL is not a government authority. It is licensed by the RBI and is regulated by the Credit Information Companies (Regulation) Act

How can I complain against CIBIL score?

You can register a complaint regarding your CIBIL score through one of the modes offered by CIBIL on their website. There is also an option to register a complaint via a phone call at the bureau’s number 022-61404300.

How can I contact CIBIL?

To contact CIBIL, you can dial the agency’s customer service at 022 6140 4300.

How can I change my contact details in CIBIL?

Since CIBIL sources data on borrowers from banks and lenders, it is important that you maintain the right contact details with your bank or lender through KYC. This will be automatically updated in CIBIL report during periodic updates.

How many times can I check my CIBIL score?

You can check your CIBIL score on the CIBIL website once a year. For additional checks, you may have to pay fees as directed by CIBIL. But you can check your credit score for free on many other 3rd party websites. Keeping a tab on your credit score is required to maintain a good credit score.

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