Difference Between Credit Score And CIBIL

If you’ve ever attempted to avail a loan or a credit facility from either a bank or a financial institution, chances are that you’ve come across something called the credit score. Now, this credit score is also sometimes referred to as the CIBIL score. Here’s where many borrowers get confused.

In this article, we’re going to be taking a look at the difference between credit score and CIBIL, and in the process help deconstruct a few misconceptions that borrowers have. Before we begin, let’s first set the stage right by taking a look at what the credit score is.

What is the Credit Score?

The credit score is essentially a three-digit financial metric that indicates an individual’s credit worthiness. The score starts from 300 and goes all the way up to 900, with 300 being the lowest and 900 being the highest. Now, the higher the score, the better the credit worthiness of an individual is.

Banks and financial institutions perceive individuals with a high credit score of 750 and above as low-risk. And as a result, they’re more inclined to give out loans to such people. That’s not all. Since high credit scores basically indicates that the individual has a strong record of repayment, lenders usually give them the benefit of low interest rates as well.

What is CIBIL?

Also known as TransUnion CIBIL and formerly known as the Credit Information Bureau (India) Limited, CIBIL is basically an entity that is tasked with the job of maintaining credit records of individuals. It is also involved in the credit rating of companies and their investment options as well.

Since the entity has a record of all the credit-related activities of individuals including those of credit cards and loans, it basically leverages this information to arrive at a three-digit score – the credit score.

What is the Difference Between Credit Score and CIBIL?

As you can clearly see, the credit score is the rating that’s given to individuals to indicate their creditworthiness and CIBIL is an entity that’s involved in the credit rating process of individuals. This is the primary difference between credit score and CIBIL.

Okay so, now that you know the difference between these two terms, let’s delve a little deeper. Contrary to popular opinion, CIBIL is not the only entity that’s involved in providing credit scores of individuals. In fact, there are three other credit rating agencies that do the same – Experian, CRIF High Mark, and Equifax.

Here’s where many individuals make a mistake. They tend to use the term credit score and CIBIL score interchangeably. While it may be okay to do so if the score is from CIBIL, it is technically incorrect to use the term CIBIL score to refer to a credit score obtained from another credit rating agency. For instance, if your score is obtained from Experian, it should either be referred to as the credit score, the Experian credit score, or the Experian credit report.

Conclusion

Well, hope you’ve finally understood the difference between credit score and CIBIL. If you wish to get your score checked, head on over to Finserv MARKETS right away. You can get your credit report within just a few minutes and can get to know a whole lot more about these scores and their importance as well.