Credit Scores in India

10-Mar-2016 written by : FSI-Team

Credit scores were first introduced in the 1950s in California, USA. Since then they have sort of become a way of living and dealing in all financial matters in western nations, especially those that involve credit. Individual credit ratings or widely referred to as “credit scores” are a very new concept in India. And it’s about time that citizens of our great nation wake up to this new avenue and adopt it in their daily lifestyle.


Credit Information Bureau of India Limited is Credit Information Company (CIC) that was founded in the year 2000. The job of CIBIL is to record and maintain information about borrowings and score on the basis of repayment patterns. It is bound by RBI guidelines. The idea behind setting up CIBIL was to aid creditors in doing a background check of a prospective borrower before they would extend any loan or credit to him or her. CIBIL has about 500 member banks and NBFCs that work with it and sends it data which is then used to make a Credit Information Report (CIR) and generate a Credit Score. A glance at this three digit number and the two pages CIR is enough for a lender to assess your credit feats.

CIBIL score is -1 if you do not have a credit background otherwise it is between 300 and 900. Generally, a score of more than 750 is considered as a good score and bankers approve of clients having more than this score. Commonly, a low score signifies you have been careless in your repayments and have mismanaged your credit in the past. If you have a lower score then you can read more about ways to improve credit score on our blog.


Financial dealings can be very tricky and one cannot be cautious enough. Many a banks have burned their hands by being reckless in sanctioning loans and being stuck due to non-repayments. Since the inception of CIBIL it has become a standard practice of all financial and non-financial lending institutions to first take an insightful look into the credit history of a likely borrower.

CIBIL currently maintains records of more than 26 crore Indians and more than 12 crore Indian companies. Data for commercial lending and borrowing is also maintained by CIBIL. Banks check corporate credit reports too before ensuing in any lending. This is a noteworthy point because most of the people in India, who are rated won’t even know anything about a score and what it means. Many people are flabbergasted when they receive a rejected loan application or are denied a credit card or further still, are declined a job. Behind all of this could be, perhaps, the hand of your credit rating of which you may not even know.

Your CIR is kept confidential and can be accessed only by members of CIBIL or by individuals wanting to review their own history and scores. No one can extract a copy of your report and CIBIL is not allowed to divulge with its details. There is a rising trend of employers asking for a credit report of a candidate under review. The candidates are asked to submit it along with their job applications. However, like abroad, very soon we expect insurance companies, landlords and even telecom companies to ask for your report and evaluate to your credit background before getting in to any business with you. So the people interested in your score are:

  • Banks – to assess a loan application
  • Individuals – who would want to take stock of their own cibil score calculation
  • Employers – while reviewing a candidate’s profile
  • In future – insurance companies, landlords and telecom companies too.


Experts believe that although CIBIL has been around for more than 15 years, yet there is a huge lack of knowledge about it. Industry experts say that while everyone should be credit literate but less than 1% are even aware about it. Due to this ignorance people are not bothered about handling their credit well and land themselves in financial dire straits.

It will be wrong to conclude that credit scores help only financial institutions. They can be made friends with and used for your own benefits. However, as there is mass lack of awareness on how to become credit healthy, people are not able to take advantage of it and things as simple as easy personal loans also worry us. If you have a favourable credit rating then you can use it to negotiate for lower rates of interest and also be favoured at workplace.

There is a need for this sort of information to reach the masses and with support from the government and regulators, we can help Indians gain financial literacy & arouse a “spirit of being credit healthy”. For example, if it is made a mandatory requirement by the regulator to do a credit check before any sanction then, more people will be affected by it thereby more people will fall under the banner of being credit aware and responsible. One another way could be to incorporate this in students’ curriculum and therefore inculcating the practice of being more credit disciplined.

May be our dear government would want to take up this suggestion and include it in school & college text books. What say Mr. Prime Minister and Ms. HRD Minister?



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