Credit Information Bureau (India) Limited (CIBIL) is the oldest credit information company in India. CIBIL score is a credit score for an individual provided by the company, CIBIL. Credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. Lenders such as banks or other financial institutions use credit scores to assess the risk involved with giving a loan to an individual or a company. This is done so as to mitigate the losses connected to bad debts wherein the party who takes the loan does not pay it back.
It is also used to calculate the interest rate at which the loan would be given along with the amount for which the loan would be given to a particular individual. Using the CIBIL Score is akin to pulling up the ‘historical data’ of an individual looking for a loan and seeing how likely it is that the said individual would be able to pay the debt off.
The CIBIL credit score is a three-digit number which represents a summary of individuals’ credit history and credit rating. The score ranges from 300 to 900 with 900 the best score. For people with no prior credit history, the CIBIL rating is -1 and for those with a credit history spanning less than 6 months, the CIBIL score is 0. For banks and other lending institutions to lend money to an individual, a credit score built for the last 18 to 36 months should suffice.