CIBIL and credit rating

CIBIL stands for Credit Information Bureau (India) Ltd and it was incorporated ten years back with the aim to summarize and share credit reports among its members. The members of CIBIL are mostly banks, nonbanking financial institutions and credit card companies. The ultimate aim of this CIBIL is to help its members to evaluate the risk involved in a particular loan through its credit score and CIR.

So here comes our next question, whats a CIBIL credit score and CIR?

The answer is pretty simple. Through the information received from its constituent members, CIBIL compiles a report (CIR report) containing the loan history of a particular person. For example, if a person had borrowed a gold loan from PNB and a housing term loan from ICICI, these two entries will be present in his CIR. This will be helpful for the next bank {to which he had applied for a loan}to assess whether the person will be able to repay the loan as he already has two loans left to pay out.

The CIBIL score is a 3 digit numeric score that ranges from 300 to 900 {the higher the better} and it is calculated based on the kind of loans the person has borrowed and the time he has taken to repay the loan. For example a person takes very little time to repay the loan will be given a far better score than the person who doesnt repay his loan at all.