Top 10 Unknown facts about CIBIL Score

Learning about your credit score not only helps you improve but also to manage it. Whenever you apply for any type of credit, the lending institution checks your CIBIL score. Based on your credit score, the lender decides whether to approve your application or reject it. CIBIL score is the primary factor considered during loan applications, but there are certain interesting facts that are less known. Here are 10 interesting facts about your credit. Read on!

10 Interesting Facts About Credit Scores That You Must Know

Here are the facts you must know:

Fact 1: Ownership Of CIBIL
CIBIL holds significant leverage in the Indian financial system. The major stakeholders are the banking and non-banking firms. TransUnion International Inc. is the most indispensable stakeholder at 66% hold in CIBIL. The remaining stake of CIBIL is distributed amongst a few other financial institutions. 

Fact 2:  CIBIL Does Not Generate Defaulters’ List
CIBIL and other credit bureaus are only responsible for collecting and maintaining an individual’s credit information. However, they do not generate any defaulter’s list. RBI generates and circulates this list.

Fact 3: Credit Utilisation is Important
Are you aware of your available credit? Credit utilisation is an important component of your credit score after credit history. Keep your outstanding debt low, lower your credit usage and pay the balance of your credit card on time. Even if you pay off your balance every month, not paying on time can reduce your credit score.

Fact 4: Different Credit Bureaus May Provide Different Scores
The credit score generated by CIBIL might be different from the score generated by other credit bureaus. Each credit bureau uses its scoring model for the calculation of credit scores. In addition, other lenders may report updated credit information to credit bureaus on different dates.

Fact 5:  Your Investments Do Not Impact Credit Score
A credit score is calculated based on your past and ongoing credit activities, such as payment history, available credit in use, types of credit used, credit history, number of credit inquiries, etc. None of your other accounts are taken into consideration. Your credit score does not include a summary of activities related to your investments, like fixed deposits, mutual funds, trading accounts, savings accounts, etc.

Fact 6: Impact of Checking CIBIL Score
You might often worry that multiple credit inquiries may affect your credit score. But if you check your credit score by yourself, that is termed a soft inquiry and will not affect your credit score. However, if a bank or lender requests information about your CIBIL score from a credit bureau (this is called a hard inquiry), this may negatively affect your score.

ALSO READ :- How to Improve CIBIL Score to Get a Loan at Lower Interest Rates?

Fact 7: CIBIL Does Not Edit or Delete Your Information
CIBIL generates your credit report based on information received from banks and lending institutions. It cannot edit or delete your information from the report. CIBIL can only update the information on your credit report only when authorised by the credit source.

Fact 8: CIBIL Score and CIBIL Ranks Are Different 
The terms CIBIL score and CIBIL rank are different. CIBIL score represents your creditworthiness, whereas CIBIL rank represents the creditworthiness of an enterprise. The CIBIL score ranges from 300 to 900; the higher the score, the better your chances of getting your loan approved. The CIBIL rank ranges from 1 to 10. The closer the company’s score is to 1, the better your chances of getting the loan. 

Fact 9: Applying for Multiple Credit Negatively Impacts CIBIL
Applying for multiple credit on within a short duration can affect your credit score negatively as your application needs to go through hard inquiry. 

Fact 10:  Low CIBIL Score Does Not Mean No Loan
Your CIBIL score is one of the factors that affect your chances of loan approval. Every lender has a different CIBIL score requirement. So, even if you have a lower CIBIL score it doesn’t always mean that all opportunities are closed for you. You can still avail of a loan, but the rate of interest offered by the lender may be higher. 

To Conclude

A credit score is an important factor that can influence your loan application. Whether you have a good CIBIL score or a lower CIBIL score, it is essential to know the important facts about these scores. Understanding these facts can help you make an informed financial decision. You can check your CIBIL score easily in just a few clicks with Poonawalla Fincorp Free CIBIL Check.