Know the Free Ways to Check the Cibil Score and Why This Score Is So Important

In the eligibility section of a loan, individuals may have noticed that they need a healthy CIBIL score to qualify, especially if it is an unsecured credit facility. It is the credit score that reflects how creditworthy loan applicants are. It is subject to change from time to time, depending on their repayment history and credit profile. So, before applying for a loan, individuals should know how to check CIBIL score online free of cost, why it is so important and how to improve it. 

What is CIBIL score?

CIBIL score is a 3-digit number within the range of 300 to 900. It reflects how creditworthy an individual is. A low credit score implies that they do not repay, they are not responsible borrowers and have a history of missing repayment dates. 

Nevertheless, the repayment history is not the only aspect that influences the credit score. The credit bureau, TransUnion CIBIL, also checks other parameters such as credit utilisation ratio, duration of credit history and number of hard enquiries (enquiry about the credit history done by lenders). After assessing all these parameters, the credit bureau determines the score against individual borrowers.

How to check CIBIL score free of cost?

Following are the 2 ways individuals can check their CIBIL score free of cost:

1. Through the official TransUnion CIBIL portal

Follow the below-mentioned steps to check the CIBIL score from the official portal of TransUnion CIBIL:

Step 1: Go to the official portal of TransUnion CIBIL

Step 2: Tap on the button titled ‘Get Your Free CIBIL Score’

Step 3: Create your user account by entering personal and contact details along with the details of your government ID proof

Step 4: Click on ‘Accept and Continue’ to submit your filled-in form

Step 5: Verify your identity

Step 6: Log in to your account 

After completing these steps, individuals can see their credit scores by going to their profile sections.

2. Through websites of financial institutions

There are also several financial institutions that let their customers know their CIBIL score without having to open an account at TransUnion CIBIL. Here is how to check CIBIL score free of cost from the website of such financial institution:

Step 1: Find the CIBIL score section on the website

Step 2: Click on the option for checking the CIBIL score

Step 3: Enter your personal details as required

Step 4: Provide your email ID and mobile number 

Step 5: Share the OTP 

Step 6: Submit your request

After this, individuals can get to see their CIBIL score on the following page.

Besides knowing how to check the CIBIL score, individuals also should know why it is important to maintain a healthy CIBIL score.

What is the procedure for CIBIL score rating?

The credit bureau, TransUnion CIBIL, takes into consideration several aspects after collecting necessary details from financial institutions. Following are all those aspects:

• Repayment History: It refers to the repayment history of the concerned individuals. They need to ensure timely payment of their EMIs, be it for their loans or credit card usage. 
  
• Credit Utilisation Ratio: Individuals get a maximum credit limit on their credit card. The amount they use against the total credit limit is called the credit utilisation ratio. This ratio should ideally stay within 30%. A higher value of the ratio leads to a negative impact on the credit score. 
  
• Credit Enquiries: After getting the loan application, lenders investigate the credit report from TransUnion CIBIL or other credit bureaus. If the number of such hard enquiries is high with respect to the duration, a negative impact falls on the credibility of the borrower.
  
• Length of Credit history: Credit bureaus also give a certain weightage to the average credit history of borrowers. With a longer average history, they can maintain or secure a higher credit score.

So, individuals need to maintain a positive credit profile marked by on-time repayment, keeping the credit utilisation ratio low, refraining from applying for multiple loans, etc., to ensure that their credit score remains high.

Why does having a good CIBIL score matter?

For most lenders, credit score is one of the parameters of the eligibility criteria for loan, especially for unsecured credit facilities like personal loan and business loan. The role of CIBIL score for home loan and other secured credit facilities is also significant, although it does not become a part of the eligibility criteria. 

It helps lenders make initial scrutiny about the creditworthiness of their loan applicants. With a ‘poor’ credit score, it becomes very challenging to get approval on loan requests. This is why individuals must take all the necessary measures to maintain a high credit score or improve it further.

In fact, during the approval stage of loans, financial institutions undertake to understand CIBIL report properly to know your current liabilities and repayment behaviour. A CIBIL report contains all the necessary details about individuals’ past and present loans including repayment status, pending dues, and even the applications they have made to borrow. 

How to improve CIBIL score?

Following are some necessary measures that individuals need to take to improve their CIBIL score:

• They will have to positively repay their loans within the scheduled time. It reflects that those borrowers are disciplined and maintain their obligations properly. 
• They should abstain from utilising the full credit limit. As mentioned earlier, their average credit utilisation ratio should ideally stay lower than 30%.
• If they have unused and old credit accounts with any financial institution, they should not go for closing them. Doing so will lower the average duration of credit history which is an important aspect based on which credit bureaus calculate the score.

Besides knowing only how to check the CIBIL score free of cost, individuals also need to focus on improving their credit profile and score. It will significantly help them in the long run by securing or retaining a high CIBIL score which is necessary to get approval on a big-ticket loan amount at an attractive interest rate.