What is TransUnion CIBIL Score and How to Check Online?

While looking for a loan, you will often come across the TransUnion CIBIL score that most lending institutions require to evaluate your loan application. In case you don't know what the CIBIL TransUnion score is, we must tell you that it is a three-digit number indicating your creditworthiness based on your credit handling in the past. Read on to learn more about this score and how to check TransUnion CIBIL score free.

What is the Meaning of the CIBIL TransUnion Score?

TransUnion CIBIL is one of India's most trusted credit information bureaus. Every bank, financial institution, non-banking financial company, housing finance company and credit card company is a member of the bureau by default and provides data about its customer's credit profiles each month. The entity currently holds information of over 600 million people and over 32 million companies.

With this information, the bureau compiles credit reports comprising the customer’s personal, employment, contact, and loan details, including repayment history, types of loans, outstanding balances, debt-to-income ratio (DTI), credit utilisation, credit enquiries, etc. Based on these details, the credit bureau awards a CIBIL score ranging from 300 to 900. A score above 700 is often a good score that spikes up your chances of credit approval.

Importance of TransUnion CIBIL Score

Whenever you apply for a loan, lending institutions, including Hero FinCorp, check your TransUnion CIBIL score to determine your creditworthiness. The score depicts your credit behaviour, based on which lenders assess the risk in sanctioning your loan application. Therefore, your chances of approval increase if you maintain a high credit score by TransUnion CIBIL.

Most lending institutions consider a score above 700 ideal for approving loans. That is why checking the CIBIL score is important before filling out a loan application form. If your score is low, you must take steps to improve it to increase your chances of approval with favourable rates, terms and conditions.

How is the TransUnion CIBIL Score Calculated?

TransUnion CIBIL evaluates several pointers to calculate your credit score. These include the following with their weightage:

1. Credit Mix (25% weightage)

Maintain a sound balance between different types of credit products in your credit portfolio. A healthy mix of secured and unsecured loans indicates that you can manage all credit types efficiently.

2. Credit Utilisation Ratio (25% weightage)

CUR, or credit utilisation ratio, is the percentage of credit limit you consume on average. Ideally, you should try to maintain a CUR of less than 30%. The lower the CUR, the higher the CIBIL score.

3. Credit History (30% weightage)

The credit bureau evaluates your repayment history by checking data from your past financial institutions. Missed credit repayments drastically affect your credit score and reduce future loan eligibility.

4. New Credit Enquiries (10% weightage)

When you apply for credit, the finance company pulls a hard enquiry on your CIBIL report. Multiple hard enquiries within a short period can significantly affect your credit score and reduce your loan eligibility.

5. Average Age of Loan Account (10% weightage)

The credit bureau checks the average age of your loan accounts when assessing your credit report. That is why retaining old accounts and cards is advisable, even if they have been inactive for a long time.

Reasons Behind Low Transunion Cibil Score

Here are some common reasons behind a low TransUnion CIBIL score, which can impact your creditworthiness and loan eligibility.

1. Late Payments: Regular delays or missed payments on loans and credit cards negatively impact your credit score.
2. High Credit Utilization: Using a large portion of your credit limit can signal financial distress, affecting your score.
3. Multiple Credit Inquiries: Frequent credit applications can lower your score as it suggests higher borrowing risk.
4. Outstanding Debts: High levels of existing debt, especially if nearing or exceeding your credit limit, can hurt your score.
5. Errors in Credit Report: Mistakes or inaccuracies in your credit report can adversely affect your score. Regularly review and correct them.
6. Lack of Credit History: A short or inactive credit history may result in a low score due to insufficient data for assessment.
7. Defaulted Loans: Defaulting on loans or having accounts sent to collections significantly impacts your credit score.

Understanding these factors can help you take steps to improve your TransUnion CIBIL score over time.

Tips to Improve TransUnion CIBIL Score

A good TransUnion CIBIL score is essential as it helps loan providers decide whether to approve your application. They depend on your credit history to determine your loan amount, interest rate, repayment tenure, and other terms and conditions. So, if your score is low, here are a few tips to improve it quick:

1. Timely Payment of Debt

Whenever you take a loan, opt for a repayment term with budget-friendly EMIs. This will help repay the debt on time. Your credit score automatically improves over time as your credit company reports timely repayments to the credit bureau.

2. Prevent Unnecessary Expenditure

Evaluating your finances and balancing your income and expenses are crucial to improving your credit score. Preventing unnecessary expenditure gives you control over your financial position, helping you repay your debt on time and minimising your loan burden.

3. Use Credit Card Carefully

Credit cards come with credit limits up to which you can borrow from the card issuer. However, that does not mean you should utilise the entire amount available to borrow. Borrowing less than what is available reduces your credit utilisation ratio and improves your credit score.

4. Time to Time Payments

Always pay your credit bills on time. Credit bill payments affect your credit score directly. Missing payments will not only result in penalties but also affect other aspects of your life, impacting your creditworthiness.

How to Check TransUnion CIBIL Score for Free?

If you want to check your CIBIL TransUnion score for free, these are the steps to follow:

• Visit the official TransUnion CIBIL website.
• Go to the ‘Personal Section’.
• Click on ‘Get Free CIBIL Score & Report’.
• Fill out an online form with details like your name, date of birth, contact details, etc.
• Enter details of a government-approved identity proof.

Your TransUnion CIBIL score will appear on the screen. You can also log in to your CIBIL account to review your credit report.

Conclusion

A high TransUnion CIBIL score comes in handy when you apply for credit. It reassures lenders of your repayment capacity and lets them determine your loan amount and interest rate. From a lender's perspective, a high CIBIL score is essential for loans as it projects you as a creditworthy borrower. Follow the steps in this article to check your TransUnion CIBIL score for free and get an idea of your loan approval chances.

Frequently Asked Questions

1. How do I find my total credit score?

Visit the official website of TransUnion CIBIL to find your credit score online.

2. How can I download the CIBIL report for free PDF?

By visiting the TransUnion CIBIL website and following the steps, you can download your credit report for free.

3. How can I get a CIBIL score of 750?

Repaying all bills and loan EMIs on time, clearing outstanding balances, controlling unnecessary expenses, and diversifying the credit portfolio are the best ways to get a CIBIL score of 750.

4. How can I download my TransUnion CIBIL report?

Visit CIBIL's official website and complete an online form to request your TransUnion CIBIL report.

5. Is the 744 TransUnion credit score good?

A CIBIL score above 700 is good enough to attract lenders with competitive interest rates.