Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.
What is credit score?
The higher the score, the better a borrower looks to potentiallenders. A credit score is a number from 300 to 900 that determines a consumer's credit worthiness.
How is it calculated?
A credit score is based on credit history – the number of loans and credit cards, total levels of debt, repayment history, the balance between secured and unsecured loans, credit utilisation and the number of credit inquiries received.
Credit rating agencies In India, there are four credit rating agencies licensed by the Reserve Bank of India. These are CIBIL (Credit Information Bureau India Ltd), Experian, Equifax and Highmark. The most widely used credit score in India is the CIBIL rating.
What is a good credit score?
The better the CIBIL score, the higher the chances of the loan getting approved. The other benefits of a good credit score are low-interest rates, better repayment terms and quicker loan approval process. A good CIBIL score may be considered to be 750 or higher.
How to maintain & improve CIBIL score ?
It is important to make timely payments of loan EMIs & pay bills by due dates. Complete utilisation of credit limits should be avoided. Also, applying for numerous credit cards or loans should be avoided.
How to check your CIBIL score for free
Visit the CIBIL website (www.cibil.com) and click on 'get free CIBIL score & report'
Enter the personal details required to create your CIBIL account
Continue to verify your identity and check your CIBIL score
Click on the 'get your free report' link on your 'my account' page
Find your CIBIL report in the 'accounts' and 'enquiries' sections and download it
CIBIL score can be checked for free only once a year on the website.
Benefits of checking personal CIBIL score
Checking personal CIBIL score provides a grasp of credit health and helps in planning monthly expenses. It provides useful insights to ensure credit profile is in good standing.
In case of discrepancy/errors in the credit score and report, a dispute can be raised with the credit rating agency and rectified.
How to raise a dispute & get the credit score rectified
Go to the website, click on 'my CIBIL' and log in
After logging in, click on 'credit reports' and select'dispute centre'.
Select 'dispute an item'
Fill in the dispute form with your contact details and click on 'submit'
Choose the section of your CIBIL report for which you want to raise the dispute & enter the relevant details CIBIL will verify the disputed information and will convey these details to the lender depending on the type of dispute.
If the lender accepts this dispute, corrections will be made by CIBIL and the updated details will reflect on the next credit report.
Contact details for raising offline CIBIL dispute TransUnion CIBIL Limited, One Indiabulls Centre, Tower 2A, 19th Floor, Senapati Bapat Marg, Elphinstone Road, Mumbai – 400 013
The writer is aVile Parle-based social activist
