What is CIBIL score and how does it impact you?

Are you hearing a lot of finance buzzwords these days like CIBIL, CIR and credit? Read to know more about what these mean.

Credit simply means – money that a bank or business will allow a person to use and then pay back in the future. As you borrow money you create a record of your credit often called credit history. Going purely by a copy-book definition, a CIBIL Score “is a three-digit numeric summary of your credit history. A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time.”

Easing it up, let’s understand the meaning of CIBIL first. “TransUnion CIBIL Limited (Formerly: Credit Information Bureau (India) Limited)” is India’s first Credit Information Company, the primary function of which remains to collect and maintain records of an individual’s payments pertaining to loans and credit cards. So these people are basically keeping an eye on you, monitoring your payment of your credits or defaults.

Anything above 700 is considered to be a decent score

Every month, CIBIL compiles reports and each individual’s/ companies’ records are maintained – the data submitted monthly by its members (banks and other financial institutions). This information is then used to create the CIR and the CIBIL Score (a 3-digit summary of the credit history) which is provided to lenders to help evaluate loan applications. The CIBIL score can always be boosted by timely repayments and more repayments on a credit card; and of course can be tampered otherwise.

So, let’s say there is a guy called Tim.

  1. Tim borrows money from the bank.
  2. The bank submits a report of the borrowed amount and other essential details to CIBIL.
  3. CIBIL uses the information and creates a 3-digit score for Tim which is his credit history – called the CIBIL score.
  4. CIBIL uses the score and creates a report in the name of Tim outlining all his credit history – called the Credit Information Report.

Obviously, the CIBIL score tends to have an impact on the borrowing capability of a person; terms of the maximum amount that’d be approved for him by the lenders.

Make sure you repay on time

Make sure you repay on time

Let’s continue on the lines of Tim.

  1. Tim borrows 10,000 rupees from SBI on April 1st which he is supposed to pay off in 5 instalments of 2000 rupees by September 1st.
  2. Tim misses his payments which lowers his CIBIL score but further opts for borrowing 20,000 rupees from ICICI on September 5th.
  3. ICICI bank will assess Tim’s CIR before approving his loan which will clearly explain his inefficiency in re-payment of his loan taken from SBI. Hence, ICICI will reject his loan on the basis of a low CIBIL score.

So the impact, largely, remains on determining your worthiness or otherwise. However, if Tim pays his debt towards SBI on time, his CIBIL score increases and ICICI or any other lender for that matter would happily provide him another loan on the basis of a healthy CIBIL score.


Something to remember: Borrowing money from a bank in the form of loan or using a credit card or purchases made from micro-lending platforms like SlicePay also have an impact on the CIBIL score. So if you are a student, buying a smartphone on flexible payments from SlicePay, you don’t just get a smartphone on hassle free monthly plans but also, a healthy CIBIL score for future vehicle/house/whatsoever loans – if required. win-win, isn’t it?

— Post by Simran Kinra, Content-Writer, SlicePay

3 thoughts on

What is CIBIL score and how does it impact you?

  1. Cibil score is applied only on pan card number you are not taking that pan card no how it score without pan card no

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