What Is The Difference Between Credit Score And CIBIL Score?

by Card Insider Personal Finance Advisor

While applying for a credit card you must have come across the terms CIBIL and Credit Score. Most of the time people get confused or use these terms for each other. However, there is a subtle difference between the two that you must know. In this article, we have covered everything regarding the Credit Score vs Cibil Score in order to make things easier for you.

Both have a significant role to play in your credit card application. Without any further delay read on to know everything about the CIBIL and Credit Score.

What is Credit Score?

A Credit Score is important for your credit card approval as it depicts the applicant’s creditworthiness. It is determined by assessing the applicant’s credit history, credit accounts, debt to income ratio, repayment history, etc.

The credit score can be easily affected by many factors say for example how many times hard inquiries have been initiated against your credit card applications. It is an integral part of credit card application or loan application scrutinization. The credit card issuers and lenders check your credit score to approve or decline your application. If you have a high or a good credit score then the chances of your application getting approved are higher. Likewise, if your credit score is low then the chances of your application being rejected increases. A credit score is not checked for only this purpose, it also plays a role in setting interest rates. So you must have understood how important a credit score is for your profile.

Also Read - Why Should You Check Credit Report And Score Regularly?

Noticeable Credit Bureaus:

To help the credit card issuers and lenders with your credit card or loan application, credit agencies/bureaus were established. These agencies keep and manage all the data related to your credit score of individuals to businesses in a credit report. The noticeable credit bureaus are;

TransUnion CIBIL: This is the most popular and the oldest credit agency in the Indian credit market. Almost every bank and NBFC are linked with this agency that has been helping them with the credit report of their customers.
Experian: This agency was established in the year 2006 but fully commenced its operations in 2010. It provides a credit score in the range of 300-900.
Equifax: This agency was established in the year 2000 and gives a credit rating between 1 to 999 and credit report information & assistance.

What is CIBIL Score?

The credit score is a three-digit given by the TransUnion CIBIL is known as the CIBIL score. The Credit Information Bureau India Ltd. (CIBIL) records all of your credit transactions and creates a credit report that let the lenders or the credit card issuers in determining the creditworthiness.

How does CIBIL work?

CIBIL Score is a summary of your credit history. It gives a glimpse to the lender as to who they are dealing with. A CIBIL score of 750 or above is considered to be a good credit score. Anything less than this can create hurdles in getting a loan or a credit card.

You can increase your credit score by adopting certain healthy tips/methods such as keeping your credit card dues clear in full and on time, and also by maintaining a low credit utilization ratio of at least up to 30%. Maintaining a good CIBIL score increases your credibility and helps you in getting credit cards or loans.

Bottom Line:

To conclude, it is essential to maintain a good credit and CIBIL score so that lenders can trust you while approving the application. Nevertheless, only two factors are important first, you need to reduce your outstanding amount so that your credit score can go up which is only possible when you pay your credit card bills or debts on time. Second, maintaining a low credit utilization ratio as it can make or break a deal for you.

If you have no credit history then you either take up a personal loan and repay it on time or you can use third-party apps such as Amazon Buy Now Pay Later to build your credit score from the scratch and then apply for a credit card.

Additional Reading - Tips To Find An Ideal Credit Card