A Credit Score is one of the most essential factors that lenders verify while sanctioning loans to eligible borrowers. In India, there are several credit rating agencies in charge of assigning this score to individuals, TransUnion CIBIL being the most prominent. Here, the full form of CIBIL stands for Credit Information Bureau India Limited.
On the other hand, Credit Information Report (CIR) is an extensive statement provided by such agencies, offering a comprehensive outlook of one’s credit activities. A Credit Score merely comprises a part of the CIR.
A recent survey has revealed that 2 out 3 Indians are not very aware of what these terms mean.
Also, individuals often use them interchangeably, which is incorrect. Hence, it is crucial to know what these terms entail, alongside their differences to avoid any difficulties during loan application.
Table of Contents
What is a Credit Report?
A Credit Report is a detailed statement of one’s credit and repayment activities. This report contains 6 sections, these are –
- Credit Score
- Personal information
- Contact information
- Employment information
- Account information
- Enquiry information
Different credit rating agencies can provide such reports by gathering substantial data to compile this financial statement.
What is a Credit Score?
A Credit Score is a 3-digit number that summarises an individual’s creditworthiness as a borrower. It ranges from 300 to 900 and is assigned as per an individual’s past credit and payment activities.
Individuals can check their CIBIL score online for free through the official website of any credit rating agency. Usually, any score above 750 is considered to be an ideal one, and it is one of the primary factors that affect loan interest rates.
Lenders put special emphasis on these two factors before approving a lender’s loan application. Even though it may seem that they represent the same thing, Credit Reports and Credit Score share some differences.
Difference between Credit Score and Credit Report
Here are some distinctions between these two concepts –
- One is a number, and another is a statement
The first point of difference between these two concepts is that a Credit Score is a 3-digit number, whereas a Credit Report offers a detailed insight into an individual’s credit portfolio.
- Credit Reports are extensive
As already mentioned before, a Credit Report includes details like regular repayments, credit details, personal information, etc.
CIBIL report considers 36 months of an individual’s credit history. Whereas, CIBIL score takes into account the previous 24 months of credit behaviour to calculate that score.
Individuals can download a free CIBIL report from the official website of the credit rating agency.
- Credit Score is not available to everyone
Technically, individuals need to have at least 6 months or more financial history to have a Credit Score. A new borrower who does not have the same cannot be allotted a score to represent his/her creditworthiness.
Contrarily, a Credit Report is always available to an individual. Once they start using a credit card or avail of any loan and begin their repayment, they will have a credit history.
These are some notable differences between these two concepts. However, their close relationship often makes it difficult to mention one without the other.
Nonetheless, being aware of the CIBIL full form and what it is all about is not enough. Along with that, individuals should also know the ways to keep this report unaffected and this score high.
Ways to improve the credit profile
Here are some ways one can improve his/her credit profile –
- Making timely payments.
- Keeping the credit utilisation ratio in check.
- Not making too many loan applications at once.
- Correcting mistakes on a Credit Report.
- Maintaining a diverse credit portfolio.
Keeping these pointers in mind can help individuals to maintain their credit profile. Moreover, leading financiers insist borrowers on having a Credit Score of 750 and above to source different loans.
Often, a favourable Credit Score makes individuals eligible for pre-approved offers that can help expedite the loan application process. These offers are available on various financial products, including home loans, loans against property, personal loans, etc. Individuals can check their pre-approved offers by providing their names and contact details.
The Credit Information Bureau India Limited represents one of the largest agencies in charge of preparing Credit Reports and assigning Credit Scores to Indians. Nonetheless, being aware of the difference between CIBIL score and report can help individuals ascertain their financial standing.