Credit Score vs CIBIL Score: Are they Even Different?

what is credit score and cibil score

In India, Credit scores and CIBIL scores are often used interchangeably, but they are NOT the same thing. While both of them are used to determine an individual’s creditworthiness, there are some key differences between them. Don’t worry; in this blog, we will break down credit score, CIBIL score, and the difference between them.

personal loan

What is a Credit Score?

A credit score is a three-digit number that is assigned to an individual based on their credit history. It is a measure of how likely an individual is to repay their debts on time. Credit scores range from 300 to 900, with higher scores indicating better creditworthiness. To get a detailed version of what the credit score is and how it is calculated, you can check out this blog by us.

What Does the Credit Report Contain?

The credit report contains information about an individual’s credit history, including their credit accounts, credit limits, outstanding balances, payment history, and credit inquiries. It also includes information about any defaults, bankruptcies, or legal actions taken against the individual.

Check your credit report regularly. Make sure there are no errors, and dispute any mistakes you find.

Remember, your credit score is like your financial reputation. Take care of it, and it will take care of you, opening doors to loans, credit cards, and even some rental apartments!

What is the CIBIL Score?

CIBIL, or Credit Information Bureau (India) Limited, represents one of India’s four principal credit bureaus. As a significant entity in the Indian financial landscape, CIBIL plays a crucial role in maintaining credit records of individuals and businesses. Financial institutions use these records to assess creditworthiness and make informed lending decisions.

CIBIL score is a credit score that is specific to India and is issued by the Credit Information Bureau (India) Limited (CIBIL). It is one of the most widely used credit scores in India.

What Kind of Data Can Be Found on a CIBIL Report?

The CIBIL report contains information about an individual’s credit history, including their credit accounts, credit limits, outstanding balances, payment history, and credit inquiries. It also includes information about any defaults, bankruptcies, or legal actions taken against the individual. The main six sections on your CIBIL report are:

1. Credit Score: Calculated by CIBIL from your credit behavior in the Accounts and Enquiries sections, it ranges from 300 to 900, with above 700 being good.

2. Personal Details: Contains your name, birth date, gender, PAN, voter ID, etc.

3. Contact Details: Lists your phone numbers and addresses as provided by various financial institutions.

4. Employment Details: Displays your monthly income as reported by banks or financial institutions.

5. Account Details: Offers a comprehensive summary of your credit facilities, including lender names, credit types (e.g., home, auto, personal loans), account numbers, ownership details, opening and last payment dates, loan amounts, current balances, and a monthly payment record for up to three years.

6. Inquiry Details: Shows how many times banks or financial institutions have checked your credit report.

Now, the million-dollar question: what’s the difference between your credit score and your CIBIL score?

Also, Read: How to Get a Business Loan on Low Credit Score?

7 Differences Between Credit Score and CIBIL Score

AspectCredit ScoreCIBIL Score 
Source of ScoresGenerated by various credit bureaus, including Equifax, Experian, and CRIF High Mark.Generated by TransUnion CIBIL Limited.
Definition and ScopeNumerical expression based on credit files to represent creditworthiness, provided by various bureaus.The specific type of credit score by TransUnion CIBIL Limited, ranging from 300 to 900.
AccessibilityEntitled to one free credit report from each bureau every year, allowing for more frequent access.One free report, including the score, once a year, as mandated by the RBI.
Impact of InquiriesThe impact of inquiries varies by bureau but generally affects the score negatively if there are too many.Multiple inquiries within a short period can negatively impact the score.
Calculation MethodologiesEach bureau has its unique algorithm, considering similar factors but with different weightages.The proprietary algorithm includes factors like credit history, repayment behavior, and credit utilization.
Update FrequencyRegularly by BureausMonthly by CIBIL
Used By    Lenders for CreditworthinessLenders, Financial Institutions

P.S. Want to Check your Credit Score? Head over to Credmudra

In conclusion, while credit scores and CIBIL scores are both used to determine an individual’s creditworthiness, they are not the same thing. The essential difference, therefore, is that a “CIBIL score” refers specifically to the credit score issued by TransUnion CIBIL, while a “credit score” can refer to any score issued by any credit bureau, including CIBIL. The methodology and factors considered in calculating the score might differ slightly from one bureau to another, leading to potential variations in scores across bureaus for the same individual. It is important to understand the differences between them and to keep track of your credit score or CIBIL score to ensure that you are able to access credit when you need it.

Happy credit scoring!

Also, Read: Get a Personal Loan Without Credit Score – 5 Fool-Proof Ways

FAQs:

1. What Qualifies as a Strong Credit Score?

Credit scores considered strong vary across different credit-rating agencies. Typically, a score above 650 is regarded as good.

2. What Credit Score do Banks typically Use?

Banks consider scores from various credit bureaus like Equifax, CRIF High Mark, Experian, and CIBIL TransUnion. In India, the CIBIL score is commonly preferred by banks for credit decisions.

3. Is there a Monthly Increase in the CIBIL Score?

Your CIBIL score, like any credit score, doesn’t automatically increase every month. It’s determined by your credit history and payment habits. Consistent on-time payments, low credit utilization, and a diverse credit portfolio can lead to an increase in your score. Conversely, frequent new credit applications, high credit utilization, and missed payments can decrease your score. Regularly monitoring and managing these factors is key to improving your credit score over time.

4. What are the Steps to achieve a 900 Credit Score?

Attaining a 900 credit score is a process that involves consistent financial discipline over time. Key practices include punctual bill payments, minimizing your credit utilization ratio, regular monitoring of your credit report for accuracy, maintaining older credit accounts to establish a longer credit history, diversifying the types of credit you use, and limiting new credit inquiries to avoid negative impacts on your score. Adhering to these habits can gradually improve and maintain a high credit score.

5. How do CIBIL and Experian Scores Differ?

Experian operates globally as a credit bureau, while CIBIL is India’s first credit information company, functioning exclusively within India. Both Experian and CIBIL provide credit scores within a range of 300-900, but the scores are referred to respectively as Experian score and CIBIL score. Despite the similar scoring range, their methodologies and market focus differ due to their operational regions.

6. What is Considered the Minimum Credit Score?

300 is the minimum credit score.

Apply Now
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Join The Leading Voices Of Fintech On Credmudra

Credmudra is a digital platform designed for financial services leaders in India to share their insights and perspectives beyond the limits of social media. It is a purpose-built platform for experts from banking, NBFCs, fintech and others to reach the right audiences and transform finance. With Credmudra, finance professionals can establish themselves as thought leaders and engage meaningfully with India's top money minds and those shaping the future of lending. Unlike social media, this platform offers a space for compelling discussions and community building within the industry. Credmudra can elevate the quality of discussions and collaboration among influential authors in Indian finance.

Connect with us Terms and Conditions*
Path199

Our Latest Blog Posts

See All Blog Posts

What is CIBIL Score and Why It Matters

Ever wondered why you get bombarded with loan offers after applying for just one credit card? Or why does your…

How to Change Mobile Number in PAN Card Online & Offline

In this blog, we're going to walk you through a task that might seem daunting at first but is actually…

Join 5,00,000+ Subscribers

Be a part of our ever growing community.

Apply Now