CIBIL score/rating is necessary to apply for loans such as home loan, personal loan, business loan, etc. A business loan is an essential aspect in today’s life for an individual’s growth, company growth, thereby resulting in the economic growth of the country. CIBIL score is an important factor for obtaining any loan, including a business loan from financial institutions.
Checking of CIBIL score
The Reserve Bank of India (RBI) licenses CIBIL, and its data related to customers is taken as authenticated. It generates reports of individuals and companies based on loans outstanding, re-payments trends, EMI payments in time, the health of balance sheets, etc. It also produces the Company Credit Report (CCR) for business consumers. Based on the scores, the lenders decide whether to lend money to the borrower for their business or otherwise.
CIBIL score is a three-digit number ranging from 300 to 900; 300 being low and 900 being excellent. Therefore the closer the score is to 900, the better are your chances of getting a loan or credit. One can check the credit score before applying for any investment to avoid rejections since they further harm one’s credit history or profile.
The main benefit of a good CIBIL score is that the loans are sanctioned quickly, and the lenders offer a competitive interest rate. Besides, one can get the charges like pre-approval charges, and processing fee etc. waived off with a good credit score. An approval for getting credit cards, with enhanced credit limits is also easy with a good credit score.
Credit Bureaus generate credit reports for business loans and play an important role in getting sanctions of such loans. It is pertinent to note that a free credit report is only available for individuals and not to business houses. One has to pay a fee for seeking a business credit report which will be discussed subsequently later. A credit report has some standard abbreviations used, which must be understood to read a credit report. These abbreviations are as below:-
NA/NH — No activity or no history of credits of loans or credit cards.
STD — Standard, where the payments are made in time as per the schedule laid down by the lender.
SMA — Special Mention Account – accounts which are overdue for payment.
DBT — Doubtful, account not paid for 12 months.
LSS — Loss, shows that account is not collectable and borrower seems to have no intention of paying back.
DPD — Days Past Due, the number of days the payment has been delayed.
Written Off/Settled Status — borrower has not paid the amount for 180 days, and the lender has written off the dues. Settled Status means that the dues have been settled with adjustments between the borrower and the lender.
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The Methodology of Obtaining the Credit Score
Most of the Bureaus have different platforms for calculating the credit scores for individuals and business houses. We shall here discuss the methods of obtaining the credit score of CIBIL.
By Registration – To regularly access the credit score and credit reports, individuals and companies should be registering on the website of CIBIL. This subscription, besides giving one the credit score, also provides access to products and services like credit monitoring.
It also has a dispute column wherein one can challenge the entries if they are not valid. The charges are Rs. 500 for the monthly report, Rs. 800 for the bi-annual report (2 reports) and Rs. 1,200 for annually for four reports in a year. Companies have to pay Rs. 10000 as registration fees and Rs. 3000 for obtaining reports as and when required (CIBIL ranking and Credit Report is given).
Steps for Registration for individuals with PAN Card
Checking of credit score by PAN card details involves the following steps:
- Log on the website – www.cibil.com score.
- Selecting the subscription one wants to subscribe to.
- Filing in necessary information such as PAN details (which should be correct to obtain the authenticated score), email address, date of birth, gender, etc.
- Click on the mode of payment. Any mode of payment like net banking, credit cards, and debit cards can be used for making payments.
- Answering the details asked for like loans availed, loans applied for, details of credit cards, etc.
The CIBIL will then calculate the credit score by contacting various agencies mentioned in the form to cross-check the correctness of the information provided.
Steps for Registration by the Companies
- Log on to the web site, as mentioned earlier.
- Completing the form which will prompt one to give the name of the company, registration address, name of applicant and relationship with the company, memorandum of understanding, and type of company (Partnership or otherwise, etc.).
- Provide the contact details like phone numbers, email address, the identity of proof, PAN number, and address proof.
- Providing loan account numbers, tax numbers such as GST and Income tax.
- Making of payment by net banking, credit card, or debit card.
- Uploading of KYC documents.
After completion of the registration process, CIBIL will provide the registration number and payment transaction ID. This will be given by email on the address provided. Registration ID will enable one to log on to the CIBIL website. After that, the documents uploaded will be verified by CIBIL and reports will be generated (company credit report, i.e., CCR and CIBIL rank).
CIBIL rank ranges from 1 to 10. 1 is considered as the best. Rating between 1 and 3 is the best to get business loans and 1 to 4 to get other loans from financial institutions. The PAN card details and KYC documents should be correctly entered without which the reports will not be generated.
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Method of obtaining Credit Score using PAN Card
For obtaining any loan, be it a business loan, house loan, education loan, and getting credit cards, getting a credit score is mandatory. Having a PAN card to get the credit score is a must either through the registration process or getting it “free.”
CIBIL gives an opportunity of checking the credit score free of charge once a year on furnishing the PAN card details. The following procedure is to be adopted:
- Visit the web site cibil.com.
- Fill personal information like name, date of birth, gender, etc.
- Fill PAN card details.
- Furnishing income details such as type of income, monthly emoluments, etc.
- Furnishing contact details like email address, telephone numbers, etc.
- Lastly pressing the submit button on the site.
CIBIL will send credit score within 48 hours of submission.
It is mandatory to have a PAN card for getting the credit score evaluated by CIBIL or any other agency. PAN card details must be furnished correctly without which the credit score will not be generated.