What is the difference between credit score and CIBIL score?

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The CIBIL score is a three-digit numeric synopsis that defines a borrower’s credit history and is a manifestation of his/her credit profile. On the contrary, TransUnion Credit Information Bureau (India) Limited or CIBIL is one of the six authorised credit rating bureaus in India that receives an individual’s financial information regarding loans and credits from financial institutions. The credit score assigned by CIBIL is known as the CIBIL score.

Just like there is no difference between credit and CIBIL score, a look at Experian score vs CIBIL score yields the same results. All these are the numerical representation of an individual’s creditworthiness.

A discourse on CIBIL and credit score

CIBIL and other rating agencies analyse each customer’s credit information to generate an accurate CIBIL score and a detailed credit report. A borrower’s creditworthiness is determined in the form of a credit or CIBIL score that ranges from 300 to 900. The financial institutions, authorised by CIBIL, provides an individual’s essential credit-related information, including repayment history, credit card bills, availed loans, and details of credit utilisation, to credit bureaus.

Apart from CIBIL, there is another prolific credit bureau in India named Experian. According to a report of January 2015, RBI has mandated that all credit institutions will become a part of all four credit bureaus, including CIBIL and Experian. Therefore, if a borrower wants to tally Experian score vs CIBIL score, he/she should know that both are reliable and are considered by financial lenders and creditors before approving a loan application.

Credit score necessary for different loans

The credit score requirement for secured and unsecured credits varies owing to their nature. To receive approval for unsecured credits, a borrower would need a credit score of 750 and more. On the other hand, when availing a secured credit, there is not much emphasis on the credit score since the funds are availed against collateral.

Both CIBIL and Experian provide a score in the range of 300 to 900, and any score above 700 is considered good by the financial lenders, leading to instant credit approval. 

To enjoy these facilities, borrowers should check their CIBIL score for free and keep themselves updated to avoid discrepancies in the credit report.

Nonetheless, one can also make an instant loan application with a low CIBIL score by undertaking a few measures.

Measures to improve CIBIL score

Besides knowing about the Experian score vs CIBIL score, one must know how to improve their score to avail a loan sans hassle –

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–         Opt for a lower loan amount – If an individual with a lower credit score chooses a loan of a lower value, there are higher chances of loan approval which will further reduce the risk of loan default.

–         Apply for a joint loan – Loans with a poor credit score can be availed with the help of a co-applicant or guarantor. A guarantor’s credit score is considered by the financial lender, thereby increasing loan approval chances. If the guarantor or co-applicant has a higher score, one can also avail of a higher loan amount.

–         Correct errors in the credit report – A borrower’s CIBIL report may contain mistakes. This can happen if the latest information is not updated correctly. These mistakes can impact the credit score, leading to issues with the loan approval.

Taking note of these above-mentioned measures can help borrowers in availing personal loans with a low credit rating. However, it is recommended that the borrowers improve their credit score before applying for a loan.

Borrowers can check their CIBIL score and report from the website of reputed NBFCs by entering their personal information, which will verify their identity and view the necessary information.

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