Is there a difference between a CIBIL rank and a CIBIL score?
There is a significant difference between a CIBIL rank and a CIBIL score. A CIBIL rank represents a numeric summary of a company’s credit report (CCR). On the other hand, a CIBIL score represents the 3-digit numeric summary of an individual’s CIBIL report.
However, in both cases, you should be aware of how to check CIBIL score, as it ascertains your creditworthiness. Additionally, you should also be aware of how you can gain a good CIBIL rank and CIBIL score.
3 major differences between a CIBIL rank and a CIBIL score
Refer to the list below to understand the major differences between a CIBIL rank and a CIBIL score:
The very first point of difference is that a CIBIL rank is a numeric summary of your company’s credit report (CCR).
Contrarily, a CIBIL score is a numeric summary of a borrower’s CIBIL report and is represented in a 3-digit format.
A CIBIL rank is only available for companies that have a credit exposure ranging between Rs. 10 Lakhs and Rs. 50 Crores.
On the other hand, a CIBIL score is available for all individuals who borrow from lenders or financial institutions or even has a credit card.
A CIBIL rank ranges between 10 and 1. Scores that range closer to 1, is considered a good CIBIL rank. It additionally secures the chances of a company getting a business loan.
On the contrary, a CIBIL score ranges between 300 and 900. A good CIBIL score is closer to 900, which increases the approval chances of an individual’s loan application.
In addition to knowing the differences, a guide to getting a good CIBIL score might also help.
Tips to get a good CIBIL score
Incorporate into your practice the following 5 tips to get a good CIBIL score and CIBIL ranking:
Repay on time
Repaying within the repayment tenure can single-handedly lay a good impact on your credit score. One must be cautious and punctual when repaying borrowed funds and credit card bills. Practising this might also convince lenders to offer you affordable loan interest rates.
Review credit reports regularly
Keeping frequent tabs on one’s credit report will give you a clear understanding of your credit report status. Similarly, if any sort of discrepancy is noticeable, you must apply for a CIBIL dispute at the earliest.
Avoid frequent credits
You must be aware that every time you apply for a loan, your chosen lender enquires for a credit report. Such enquires are termed as hard enquires. Every such enquiry leads to a negative impact on the credit report.
Practice minimum credit utilization
Borrowers who frequently exhaust their entire credit limit are considered financially unhealthy. Thus, being classified as financially unstable, lenders would not consider offering further credit. Experts suggest that one must not exceed 30% utilization of their credit limit.
Don’t stick to one credit type
It is advisory that you have a healthy mix of unsecured and secured loans in their tray. A healthy mix of the two convinces lenders you can handle both, and hence, are more creditworthy.
Considering the 5 tips mentioned above, one might get a good credit score, but your lender might check your CRIF score instead.
Like a credit score, a CRIF score ranges from 300 to 900. A good CRIF score is more than 750, and a bad CRIF ranges between 300-500. Thus, to attain a good CRIF score, borrowers must maintain a good debt-to-income ratio and credit utilization ratio.
You can check your credit score for free online. Apart from being a soft enquiry which will not significantly affect your credit score, you can also compare the various plans on offer from different financial institutions according to the score.
In conclusion, potential borrowers should know how to check CIBIL score and try following the tips to maintain a good score. Moreover, they should compare offerings across lenders to choose an ideal one.