We all have heard many finance related words like credit score, CIBIL score, credit report. But the meaning of these words and the difference between them is something that causes confusion. When applying for a loan, everyone will pay close attention to the credit history. But it's not just about credit history. Banks prefer to lend money to people with a good credit history to reduce the risk of not getting the money back. Let's take a look at what the CIBIL score and credit report are and what is the difference between them.

What is a credit score?

A credit score is a 3-digit number that reflects your credit history. A credit bureau looks at your credit history and calculates a score, usually between 300 and 900. As your credit score increases, your credit history will improve. Most lenders in India generally offer easy loans to people with a credit score of 700 or above.

What is CIBIL score?

CIBIL stands for Credit Information Bureau (India) Limited. CIBIL is one of the four major credit bureaus in India. The other three are Equifax, CRIF Highmark, and Experian. The four bureaus have been licensed by the Reserve Bank of India (RBI). The score calculated by CIBIL is called CIBIL score. The main difference is that CIBIL is a bureau, which gives its own score, whereas other bureaus also give credit scores. All four credit scores are equally valid, but most banks prefer the CIBIL score.

Difference between CIBIL Score and CIBIL Report

The CIBIL report is a document generated by CIBIL, which shows your CIBIL score, loan accounts, and payment details. This includes information such as past loans, credit card payments, and how well you've paid them back. This information is used by CIBIL to calculate your CIBIL score.

The report also includes your personal information such as your name, address, PAN number, and contact information. Whenever you apply for a loan or credit card, the lender updates CIBIL about it and these applications are recorded in your CIBIL report. The other three credit bureaus offer their own credit reports.

Credit Score and Loans in India

If you have used loans or credit cards in the past, check your CIBIL score on the official CIBIL website before applying for a loan. Make sure your credit score meets the requirements of the loan you are applying for. If your credit report isn't good, try to improve your score first before applying for a new loan to increase your chances of getting approved.