written by | February 28, 2022

What differentiates your credit score from the CIBIL credit rank?

The CIBIL Report and its score is a comprehensive rating of your credit information in the CIBIL rating agency's CIR or Credit Information and Report files. What is the difference between CIBIL score and credit score? Essentially, the CIBIL score or credit score rank is used to judge the  commercial potential borrower's risk capacity, financial responsibility, history of serial or concurrent defaults, etc. Let us see why maintaining such a score is important for you.

Did You Know?

About 50% of India's working population ( nearly 400.7 people) are credit active, and the credit information companies like CIBIL, Experian, etc., cater to about 200.7 million people's credit reports. 

Is CIBIL score and credit score the same?

The CIBIL report has a wide array of data, your individual and business information, personal information, risk scores, previous loan repayment history etc. Potential borrowers of credit products like loans, credit cards, etc., are rated on their CIBIL score by the banks, investors and lenders or financial institutions when making a lending decision. 

Hence in the  CIBIL score vs credit score debate, to reach your financial goals, individuals need a CIBIL score of 750, and commercial borrowers or businesses need a credit rank of 1 to avail loans or credit cards. The difference between credit score and CIBIL score  is that the 3-digit score is the credit score, whereas the CIBIL score is graded as good, average or poor. Since 2017 January, The RBI or the Reserve Bank of India has mandated that credit bureaus in India, like CIBIL, Experian etc., provide customers with a free credit report/ score per year to improve and monitor their scores.

What is an individual's CIBIL score?

Leading financial institutions, banks, investors, etc., use the Credit Information Report CIR and credit score of credit reporting institutions CIC like Experian, CIBIL etc., to base their risk assessment and lending decisions whenever a loan application is made to them. The 3-digit CIBIL score is the most popularly used credit score rating of your financial information and loan repayments that are not fixed and can keep improving or changing. The CIBIL vs credit score difference is that the credit score generally spreads from 300 to 900, the highest possible score at CIBIL, the CIC. Responsible borrowers have a 750 credit score or more. To help you understand, here are the different CIBIL score ranges.

NH/NA: If your credit score indicates an NH or NA, then your CIBIL score reflects that your score is "not applicable" or NA and is because there is "no history" or NH to score your CIBIL score. Such a situation occurs when you have never been issued a credit card or have no history of taking a bank loan. It takes at least six months of credit to provide a credit score. To avail a loan from banks or other financial institutions, you must prove your credit history of promptly paying loans and not having any non-performing or doubtful (DBT) loans. 

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CIBIL score ranges

CIBIL score range of credit scores from 350 to 549: This score ranging from 350 to 549 is a bad score and marked SUB in CIBIL's rating system. This score generally indicates late payments of EMIs on your loan or credit card bill payments. A bad CIBIL score makes it hard to obtain loans or a credit card as the lenders fear you are a high-risk candidate for defaulting on EMIs and bills. 

CIBIL score range of credit scores from 550 to 649: This range of CIBIL score is also considered a bad score that needs improvement before being offered a loan/credit card. Lenders feel you have issues in paying your EMIs or bills on time. If you are offered a loan, the banks generally charge you a higher loan interest rate or insist on collateral support and guarantors. 

CIBIL score range of credit scores from 650 to 749: A CIBIL score between 650 and 750 is an average score and indicates that you have shown a good record of credit behaviour. But, you must better your CIBIL score to 750 for lenders to lend you a CIBIL-score based easy loan with the best interest rates.

CIBIL score range of credit scores from 750 to 900: A score of 750 to 900 is also considered the CIBIL STD or standard norms for the account. This score shows that you are a safe bet for a loan or credit card as you are disciplined and have been promptly paying off your loan EMIs and credit card payments. Financial institutions, banks etc., consider you the lowest default risk and gladly offer you their credit products and loans.

What is meant by CIBIL Credit Rank?

Based on your business's credit history collated from data submitted by banks and financial institutions across India to CIBIL, a CIBILCommercial Credit Rank is assigned to the company. The credit ranking system or the CIBIL score for companies is like the scoring system of an individual's credit score rating and ranges from 1 to 10. The past repayment history of a company has a strong impact on lending decisions and future behaviour of the company when availing credit products since the rank or company CIBIL score and credit score are same. Thus the company's credit ranking is an important index of its financial health. Here is how credit ranks are understood.

  • A 1 to 5 rank is the average range of credit ranks for companies. A 1 rank is the best possible score, while 10 is the poorest. The closer your company's rank gets to 1, the better the company's credit check, loan terms, interest rates, and possibilities of getting commercial loans for your company's growth.
  • Similar to the NA/NH rating of individual's, the -1 CIBIL score or -1 rating means no credit history is available.
  • A rank between 5 and 10 is considered a very poor score and is similar to an individual scoring between 300 and 600. 
  • If no credit history is available, a -1 CIBIL score is awarded. 

Also read: Government extends Emergency Credit Line Guarantee Scheme till March 31, 2022

Difference between CIBIL score and credit score:

Take a quick look at the table below to understand the differences between the credit score and the credit rank.

CIBIL Score

CIBIL Rank

Applies to individuals only.

Applies to all companies.

Consists of 3-digits between 300 and 900.

Consists of a single-digit rank between 1 and 10.

The individual score depends on the CIR or Credit Information report and includes the account status and the number of inquiries.

The single-digit rank summarises the CCR or Company Credit Report as a whole.

A 600 to 750 is considered an average score, while a score of 750 is a great score for availing of loans.

A score of 1 to 5 is considered for loans, and a rank closer to 1 is considered good, and a rank of 5 means it is an average rank that will need collateral or higher interest rates.

The credit score is issued to all individuals and based on the individual's credit history.

The rank is only awarded to companies with a loan amount of ₹10 Lakh to ₹50 Crores.

The CIBIL TU score is marked NH or NA meaning no history or not applicable.

The CIBIL score -1 is given when no credit history is available.

Understanding CIBIL vs credit score

Your CIBIL score is part of the CIR, or CIBIL Credit Report contains all details of your present and past credit history. It has your contact details, personal and employment information, all credit card and loan details issued to you. Also, it has all the information on the number of enquiries made about your account. It does not contain any information about your assets, deposits etc. 

The 3-digit score summarises your credit score on a scale that varies from 300 to 900 and indicates your creditworthiness, payment behaviour and credit history. That's why bankers insist on a CIR and credit score to evaluate how your past repayment behaviour may impact your present and future borrowings. The CIR or CIBIL Report considers a credit history of 3 years or 36 months. However, the CIBIL Credit Score considers the last 2 years or 24 months credit behaviour history. Thus both play a critical part in your eligibility for loans or a credit card.

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If a customer does not possess credit information of at least six months, then a CIBIL score is marked as NA or NH meaning Not Available or No History. Such customers need to build their credit score or footprint of credit history. Some measures that help are timely repayments of EMIs and credit card bills. Paying on time is crucial as DPD or days past the due date of credit cards negatively impacts your credit score. Mixed credit history is also considered healthy credit utilisation, indicating that you have availed of various loans like home loans, auto loans, personal loans, credit cards, etc. The good score is 750, and 79% of the customers with CIBIL scores in the range of 750 to 900 get credit products and bank loans. 

What does CIBIL score -1 means?

The CIBIL Rank is a 1-digit rank varying between 1 and 10 and corresponds to the individual's credit score of 300 to 900. It is a part of the CCR or CIBIL's Commercial Credit Report and contains all details of your company's present and past credit history. 

  • It contains the company's contact details, GST number and summary, a unique company DUNS number, the company's credit repayment history, amount of the institutional loans availed, the outstanding balance, the total credit extended and even instances of the company being a guarantor to loans. 
  • The rank is only awarded to companies having an outstanding loan amount of ₹10 Lakh to ₹50 Cr. Hence all proprietorship, partnership, private limited and public companies having an outstanding credit between ₹10L and ₹50 Cr will have a credit rank.  
  • The single-digit rank summarises a company's credit score on a scale that varies from 1 to 10 and indicates the company's creditworthiness, payment behaviour, and credit history. That's why bankers insist on a CCR, GST reports and the credit rank (between 1 and 5), along with the Profit and Loss Statement for three years to score the company's loan eligibility. The CCR and CIBIL Rank needs at least six months of credit history. In cases where no credit history is present, a minus one rank is awarded.  
  • Then the CIBIL score -1 means companies need to pay attention to building their credit footprint of credit history. Some measures that help are timely repayments of EMIs and company credit card bills. Paying on time is crucial as DPD or days past the due date of credit cards negatively impacts your credit score. 
  • Mixed credit history is also considered healthy credit utilisation, indicating that you have availed various institutional loans like overdraft facilities, machinery loans, working capital limits, etc. For companies, credit rank is just as important as a credit score is to an individual when the bankers or lending institutions underwrite loans or decide on loan eligibility.

Also read: What Are Debit and Credit? Bookkeeping Basics Explained

Conclusion

The credit score and CIBIL score rank are similar and yet dissimilar. They vary as the individual's score mixes credit history, enquiries and the CIR. The similarity is that both form the foundational range of the CIBIL score and credit score difference that decides on either an individual's or company's creditworthiness for loans and credit products, as seen above. Need to learn more about running your business, GST, financial reporting, employee management, etc.? Try the KhataBook app today.

FAQs

Q: What is the significance of the CCR's DUNS number?

Ans:

The unique DUNS number is a CIBIL assigned number for companies. Using the DUNS number draws up the entire credit history of the company. When this DUNS number is reflected as 99-999-9999, it indicates that no DUNS number is assigned to your company or the DUNS number is yet to be processed as in the cases with -1 rank. The complete credit report of such companies will then need to be drawn based on the company name and details in the enquiry stage.

Q: Do Fitch ratings, CRISIL ratings and CIBIL ratings mean the same?

Ans:

No. These three are different. 

  • The Fitch ratings are used to rank the issues of a company. They are scaled from AAA to BBB for the grade of investment, /- for recovery or default probability and BB to D for grading speculatively.
  • The CRISIL rating is a product rating, and customers and investors use the CRISIL score to study a specific product offering's health. 
  • The CIBIL score or rank is an individual's / company's credit rating used by banks and financial institutions to check the loan applicant's creditworthiness, repayment history and creditworthiness.

Q: Can the CIBIL credit score and rank be improved?

Ans:

Yes. You can work on both the rank and the score issued by CIBIL to increase your loan eligibility. You will need to be prompt in repayments, have a better credit mix, and monitor your rank or score at least once a year.

Q: Do the 'written off' loans reflect on the credit rank and score?

Ans:

Yes. Written off loans harm the rank or score, and it effectively means the lending institution terms you a non-payer or defaulter of loans.

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