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CIBIL: Credit Information Bureau (India) Limited

Established in 2000, Transunion Sibyl Limited (formerly Credit Information Bureau (India) Limited) is India's first credit information company. It collects and maintains credit-related information of individuals and corporates, including loans and credit cards. These records are submitted to the Credit Bureau from time to time by the member institutions. The bureau then uses the information to create a credit report and issue a credit score. One important point to note is that CIBIL is a database of credit information. The credit bureau does not make any decisions about lending. It only provides data to banks and other financial institutions, which use it to filter applications for loans and credit cards.

How does CIBIL work?

TransUnion CIBIL collects monthly data from financial institutions regarding your loan and credit card payments. Based on the information provided, CIBIL will prepare your credit report and credit score, which will then be used by lenders to determine your financial health. CIBIL reports and scores should not be taken lightly as they play an important role in your financial journey. They decide if you are eligible for a loan or credit card. In addition, financial institutions are more willing to approve higher limits for those with better credit scores. Another important role of the CIBIL score is in terms of setting interest rates. A high CIBIL score can help you get lower interest rates and give you the power to negotiate.

Why CIBIL score is important

If you want to get a home loan, mortgage and other approvals, you cannot ignore the score of the Credit Information Bureau of India Limited (CIBIL). The CIBIL score helps lenders decide whether or not to give you a home loan.

If you hear a friend's repayment track is always clean, will you lend him millions of rupees? Probably not. But if you have a registered and authorized agency that is in the business of establishing a credit score based on reliable facts and sources of information, you can really be a friend to this 'needy friend'.

This is why banks and financial institutions check CIBIL scores. It gives lenders a snapshot of your credit health and history, and your willingness and ability to repay the loan on time.

The merits of CIBIL are very important when it comes to borrowing. When you apply for any type of home loan product, the loan officer first determines your creditworthiness by downloading your CIBIL report.

If your CIBIL score is high, chances of getting a home loan are strong, if other factors are working in your favour. If the borrower is satisfied with the terms of the property rules, credit history and income, you can bargain for a few fees or charges.

But if your CIBIL score is low, then your other home loan eligibility criteria must be sufficient for a lender who will pay you the required home loan amount.

Author

Santosh Patil

Founder & Director @ Alliance Tax Experts

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