Context:
The Kerala High Court recently held that an application for education loan by a student could not be rejected on the ground of a low CIBIL (Credit Information Bureau (India) Limited) score.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- About CIBIL (Credit Information Bureau (India) Limited) score
- Credit Information Bureau (India) Limited (CIBIL)
About CIBIL (Credit Information Bureau (India) Limited) score:
- The CIBIL score is a three-digit numeric summary of an individual’s credit history.
- CIBIL, or Credit Information Bureau (India) Limited, is responsible for maintaining and calculating credit scores in India.
- The value of the credit score can range between 300 and 900.
- Lenders use the CIBIL report and credit score to assess the risk of lending to applicants and make decisions regarding loan or credit card approvals.
- A higher CIBIL score indicates a better chance of loan or credit card applications being approved.
How is CIBIL Score calculated?
- The CIBIL score is derived from the credit history present in the CIBIL Report.
- It takes into account the borrower’s credit profile over the past 36 months.
- The credit profile includes various types of loans, such as home loans, credit cards, personal loans, automobile loans, and overdraft facilities, as well as the payment history associated with them.
Credit Information Bureau (India) Limited (CIBIL):
- CIBIL is the leading credit bureau and Credit Information Company (CIC) licensed by the Reserve Bank of India.
- Its primary function is to collect and maintain financial data provided by lenders, generate credit reports, and provide credit scores for customers.
- CIBIL maintains credit files on around 600 million individuals and 32 million businesses.
- CIBIL India is part of TransUnion, an American multinational group, which is why credit scores in India are known as the CIBIL TransUnion score.
What is a CIBIL Report?
- A CIBIL Report is a comprehensive credit report that includes the consumer’s CIBIL Score, credit summary, personal information, contact information, employment details, and loan account information.
- Lenders consider both the CIBIL Score and Report to assess a person’s loan eligibility.
Source: India Today
