written by | March 22, 2022

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Things You Need to Be Aware of Cibil TransUnion Score 2.0

The CIBIL TransUnion Score 2.0 is an updated version of the previous credit score. It is based on the data obtained by the CIBIL bureaus from the four credit bureaus currently operating in India. 

  • The new version uses an algorithm that considers the individual's creditworthiness through different parameters, including age and repayment history. 
  • It is designed to make lending decisions easier for banks and other financial institutions. This new score is available online and through FTP.
  • The CIBIL 2.0 TransUnion credit score model, provides a risk index for new borrowers, generally those with less than six months' credit history. 
  • A score is between 1 and 5, where one is the highest, and five is the lowest. A higher score means that the new borrower is not as high a default risk as someone with a long credit history, which will help credit institutions better classify these new customers.

This article will guide you through the various steps to calculate the CIBIL TransUnion score 2.0. Also, we'll discuss how to improve your credit score.

Did you know?

The CIBIL credit report determines your credit status, but CIBIL won’t allow you to learn what purposes the scores are used for. This measure is in place to give the lending bank the full authority to take the final decision on your loan application.

What Has Changed in CIBIL TransUnion Score 2.0?

The TransUnion CIBIL Score 2.0 is a new version of the credit report that evaluates the credit history of new borrowers. These borrowers don't have a credit history yet, so the CIBIL score is a risk index. The score is based on several parameters, including demographics, loan type, and repayment track. If the borrower has a sound repayment track, the TU CIBIL score will be above 740.

Previously, borrowers with less than six months of credit history had zero credit scores. This model considers the borrowers' ability to repay the loan amount. Until now, these borrowers had a 'zero' credit score, and financial institutions would extract the report for background checks and an estimate of their loan eligibility. 

India's new TU CIBIL uses a simplified rating system suitable for lenders. It considers the customer's life cycle and the individual's repayment capability. For instance, users with no credit history were previously rated as NA or NH. Under the new framework, the ideal credit score for a first-time borrower is now 662-697. The new CIBIL 2.0 will be the standard benchmark for credit assurance by banks. 

Also Read: CIBIL Dispute Resolution

Characteristics of the CIBIL TransUnion Score 2.0

The CIBIL TransUnion Score 2.0 is a credit report that helps credit institutions better predict the risks of extending credit. This score ranges from 300 to 900, with the highest number denoting an increased risk of default. The CIBIL TransUnion Score will improve asset quality and credit penetration. Several banks and financial institutions in India implement the TransUnion CIBIL report with the new score. 

Listed below are the characteristics of the CIBIL TransUnion score 2.0.

  • The new CIBIL TransUnion Score 2.0 introduces the risk index score for first-time borrowers. A risk index is a number that ranges from 1 to 5, with 1 being the lowest risk and five being the highest risk. 
  • The new CIBIL TransUnion India Score will help lenders segment borrowers with less than six months of credit history by suggesting those with the lowest risk. A high CIBIL consumer score means an increased risk for lenders.
  • Its availability across channels makes it easier for users to use. It's also available online and through FTP. Regardless of where you get the CIBIL TransUnion Score, it's a good idea to check it regularly so that you're prepared for the best opportunities. 
  • Even if you're not planning on applying for loans, your credit report and score can help you determine whether or not you qualify for certain services.

Advantages of the CIBIL TransUnion Score 2.0

CIBIL TransUnion Score 2.0 is a new scoring model lending institutions use to evaluate prospective borrowers. It has been specifically designed to meet India's evolving credit and borrowing trends. 

Some of the advantages of the CIBIL TransUnion Score 2.0

  • CIBIL TransUnion Score 2.0 is available for all 862 member financial institutions and banks in the country. The score enables lenders to make more informed decisions on creditworthiness. This score also allows the institutions to assess the repayment capacity of individual customers and identify those who are less likely to repay their loans. While it is still in the experimental stages, it is expected to be more valuable and accurate in determining creditworthiness.
  • The score is made available through different channels, including online and FTP. The CIBIL TransUnion Score 2.0 provides a scientific rationale for creditworthiness. It enables banks and other financial institutions to make better credit decisions. It is free and a valuable tool. It can help borrowers apply for loans and improve their financial situation.
  • CIBIL TransUnion Score 2.0 has simplified the lending process. It is also a more effective way to assess credit risk. It is a more accurate reflection of the borrower's creditworthiness. For instance, it can determine the amount of debt the individual has. It can also be used to identify the amount of debt they have. Lastly, it can be used to identify which types of loans they would be able to repay.
  • CIBIL TransUnion Score 2.0 is a credit risk index. It is a score that ranks a borrower based on the number of months they have had a credit history. It can also classify first-time borrowers and improve the quality of the lender's decisions. Further, the score can help lenders manage their cross-risk by providing the most accurate information for first-time borrowers.
  • CIBIL TransUnion Score 2.0 introduces a risk index score for individuals with less than six months of credit history. This score reflects the borrowers' risk and makes smart financial decisions. The new scores can be beneficial for evaluating loan applications and determining eligibility for various services. It will allow the borrower to make smart financial moves and increase their credit score. There are also many benefits of the CIBIL TransUnion Score.

Lenders' Reactions to the CIBIL 2.0 TransUnion Score

The new CIBIL TransUnion Score is available through multiple channels and can be used for different loans. It is also compatible with CIBIL's credit information reports and portfolio review reports. Many financial institutions, including banks, will use it. It is a significant change, making it easier for lenders to assess borrowers' repayment capacity. 

 Lenders must continue to understand the impact of this new credit scoring model and be aware of the potential ramifications.

  • CIBIL 2.0 TransUnion Score is a new credit scoring model. 
  • It will help lenders make better decisions. 
  • It will also refine loan terms, particularly for first-time borrowers. 
  • This model is a more accurate indicator of a borrower's repayment capacity. 

It was developed with the Indian market and consumer behaviour in mind. So, the new CIBIL score will be very useful to lenders and customers. CIBIL scores are based on a three-digit scale from 300 to 900. The score is provided by TransUnion CIBIL Limited, an Indian company. 

  • It has access to over 600 million people and has 24,000 members, including traditional and online lenders. 
  • The new system helps lenders make sound decisions. So, it's imperative to get your CIBIL 2.0 TransUnion Score and make sure you're on the right track.

Also Read: What differentiates your credit score from the CIBIL credit rank?

The Effect of the CIBIL 2.0 TransUnion Score on Borrowers

The CIBIL 2.0 TransUnion Score is a new model that helps lenders judge borrowers' creditworthiness better.

  • CIBIL TransUnion scores are based on a three-digit tally that assesses the likelihood of repaying a loan. 
  • Most banks and financial institutions use a three-digit tally to determine if a borrower is creditworthy. Ideally, a CIBIL score of 700 or more is a good score.
  • The CIBIL score is a reliable indicator of creditworthiness, and CIBIL 2.0 takes this into account. The new model will make it easier for credit institutions to decide loan applications based on an individual's repayment capacity. In addition, it will allow more lenders to offer flexible loan terms to those with poor credit histories. Most banks will likely adopt the updated score as well.

The CIBIL TransUnion score of 2.0 is available to lenders through various channels, including web and FTP. By incorporating these factors into their lending and borrowing processes, CIBIL scores are more accurate than ever. 

Conclusion 

Getting your CIBIL score is a critical step in securing a loan, and the CIBIL 2.0 version is here to help. Unlike the older version, which is based on credit scores and credit histories, the newer one is based on your financial account. The new CIBIL score will not affect your loan application, but you'll still want to make sure you're not over-indebted. Using a free CIBIL score and report is a great way to stay on top of your finances.

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FAQs

Q: Is CIBIL a subsidiary of TransUnion?

Ans:

Yes,in 2017, TransUnion acquired a 92.1% stake in CIBIL.

Q: How should I interpret my TransUnion CIBIL report?

Ans:

Getting a copy of your TransUnion CIBIL report can be an overwhelming experience. It is especially true if you have no prior knowledge of the report and don't expect it. Fortunately, several resources help you understand your TransUnion CIBIL report and make it easier to navigate.

Q: What does a good CIBIL TransUnion score 2.0 look like?

Ans:

You can improve your credit score by keeping debt under 30% of your available limit and paying on time. The reason for this is that lenders will be less inclined to offer you a loan if you have a high debt to income ratio. Another common mistake is to carry multiple credit cards or loans and maintain a particular gap between the balances on your cards and loans. You can improve your TransUnion credit score by making timely payments on all your accounts.

Q: Which of the CIBIL scores is correct?

Ans:

The answer will depend on your financial situation. Credit scores are based on the same underlying information and predict the likelihood of falling behind on a bill in 90 days. It will be much easier to obtain a loan if you have good credit. If you have bad credit, you will need to boost your score to get a loan.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.