Terms like credit score, CIBIL score, and credit report can be very confusing for loan applicants. These terms are related to the credit profile of an individual that helps an individual to get borrowing done in an easy and affordable manner. Before a loan provider offers you alone, your credit score and CIBIL score are checked with the help of various online credit bureaus.
For an affordable and easy approval experience, an impressive CIBIL score is one of the best ways to make sure that you have handled your credit activities in the past in the right manner. Without a good credit score, you may get a denial or an expensive loan.
Therefore, it is very important to understand both aspects in the right way in order to make the right decision in borrowing and improve your online credit score in the right way.
What is a credit score?
A credit score is a 3 digit number that represents the entire financial journey of a borrower. It takes into account all the credit activities, financial behavior, credit profile, and various loan repayment histories.
A good credit score is always an important aspect to get easy borrowing experience, instant approval, and an affordable loan. With a good credit score, an individual gets to meet credit eligibility and maintain a good credit profile. There are various ways by which a credit score can be calculated and built.
What is a CIBIL score?
The full form of CIBIL is Credit Information Bureau (India) Limited. CIBIL is one of the four major credit bureaus in India. The other three bureaus are Equifax, CRIF Highmark, and Experian. All four credit bureaus are licensed by the Reserve Bank of India. The credit score calculated by CIBIL is known as the CIBIL score.
A credit score from any of the 4 credit bureaus is equally valid. However, most banks usually prefer CIBIL scores. Therefore, the credit score calculated by CIBIL is always a recommended one by the loan providers. There can be various reasons behind such an option, however, what matters is an accurate CIBIL score.
Difference between credit score and CIBIL score
CIBIL is one of the four major credit bureaus in India. The credit score calculated by CIBIL is known as the CIBIL score. So, the only difference between CIBIL and credit score is that credit score can be provided by any of the 4 credit bureaus in India. However, a simple score will only be calculated by CIBIL Bureau.
Ways to improve your credit score
If you are thinking of improving your credit score, you need to take on some activities that will help you build your credit CIBIL score.
- Be your credit card and monthly loan installment at the same time, maintain the due date of the payments, and do not delay your payment after the due date. When you make your payments on time the credit score gets improved and you maintain a good credit profile.
- Keep your credit accounts open. If you have a credit account that has a long credit history it is important for you to keep it open even when you do not use it. The longer the credit the better will be the credit eligibility and hence, you will improve your credit score
- Do not apply for multiple loans in a small span of time. When you keep on applying for multiple loans, the loan provider will run a hard inquiry on your credit report to check your credit score and decrease your credit score in a way. But every hard inquiry runs on your credit score, you lose 50 points from your credit score. Therefore it is important that after a rejection you do not keep applying for multiple loans, rather you can improve the loopholes.
- Always pay your credit card bills and monthly installments in full amount. It is not recommended to keep any outstanding or overdue amount in your credit card payments. When you keep and over do you indirectly damage your credit score as well as make your loan more expensive by adding only charges.
Check your online credit score on various digital platforms that offer an instant and free credit score check. You can also download your credit report instantly on your registered email address and check the areas of loopholes.