Credit score vs Cibil score : What is the difference between them?

Having a good understanding of your creditworthiness is crucial when it comes to personal finance. This often leads to questions about credit scores and CIBIL scores. While these terms are frequently used interchangeably, they are not the same.

In this blog, we'll explore whether CIBIL score and credit score are the same thing, the nuances of CIBIL Score vs Credit score, helping you grasp the difference between Credit score vs CIBIL score and understand why it matters for your financial health.

Your credit score is a numerical evaluation of your creditworthiness based on your credit history. It helps lenders assess how risky it is to give you a loan. Typically, credit scores fall between 300 and 900, with higher scores indicating better creditworthiness. The score is calculated using various factors from your credit report, including your payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries.

Different credit bureaus use different models to calculate credit scores, so you might see variations depending on which bureau’s report you are viewing. These models can include FICO scores and Vantage Scores, among others.

The CIBIL score is a specific type of credit score that is provided by the Credit Information Bureau (India) Limited (CIBIL), one of the major credit bureaus in India. The CIBIL score also ranges from 300 to 900, similar to general credit scores. It reflects your credit history based on the information provided by lenders and financial institutions.

CIBIL is a part of TransUnion, a global credit information company, and its score is widely used by lenders in India to evaluate an individual’s creditworthiness. The CIBIL score is calculated using a similar methodology to other credit scores, considering factors such as payment history, credit utilisation, length of credit history, and types of credit accounts.

Source of the Score

a) Credit Score:

This is a generic term for any credit score provided by various credit bureaus. Different bureaus might have different scoring models and ranges.

b) CIBIL Score:

This specifically refers to the score provided by CIBIL, a major credit bureau in India.

a) Credit Score:

Can be provided by multiple credit bureaus such as Experian, Equifax, and TransUnion, each with their own scoring model.

b) CIBIL Score:

Exclusively provided by CIBIL, reflecting your credit behaviour based on information from lenders and financial institutions.

a) Credit Score:

Used globally but can vary based on the bureau and the country.

b) CIBIL Score:

Primarily relevant in India, where CIBIL is one of the major credit bureaus.

a) Credit Score:

The models used to calculate credit scores can vary between bureaus (e.g., FICO vs. Vantage Score).

b) CIBIL Score:

Calculated using CIBIL’s specific model, which is based on the credit information provided to them.

a) Credit Score:

Lenders globally use different credit scores to assess creditworthiness.

b) CIBIL Score:

In India, it is a critical factor for lenders when evaluating loan applications and creditworthiness.

While the CIBIL score is a type of credit score, not all credit scores are CIBIL scores. The term "credit score" encompasses various types of scores provided by different credit bureaus, including CIBIL. Thus, when comparing "CIBIL score vs credit score," it's essential to understand that CIBIL score is a specific credit score provided by CIBIL, whereas a credit score can refer to scores from other bureaus as well.

For instance, if you are applying for a loan in India, your CIBIL score will be prominently used by lenders. However, if you were to apply for credit in a different country, the credit score you receive might come from a different bureau and could be calculated using a different model.

Checking your CIBIL score is a straightforward process. You can request your CIBIL report from their official website or through various financial institutions that offer this service. You are entitled to one free credit report per year from CIBIL, which allows you to review your credit history and score.

Similarly, you can check your credit score from other bureaus like Experian, Equifax, and TransUnion by visiting their websites. Some financial institutions and credit card companies also provide free credit scores to their customers.

Improving Your CIBIL Score and Credit Score

a) Pay Bills on Time:

Timely payment of bills and loan EMIs is crucial for maintaining a good credit score.

b) Maintain Low Credit Utilisation:

Keep your credit card balances low relative to your credit limit.

c) Build a Long Credit History:

A longer credit history can positively impact your score.

d) Diversify Credit Types:

Having a mix of credit accounts, such as credit cards and loans, can be beneficial.

e) Monitor Your Credit Report:

Regularly check your credit report for errors or discrepancies and address them promptly. Know more about how to improve your cibil score.

Understanding credit score vs CIBIL score is essential for navigating your financial journey. While the CIBIL score is a specific type of credit score used primarily in India, the term "credit score" encompasses a broader range of scores provided by various credit bureaus globally. Both scores serve as vital tools for assessing creditworthiness, and maintaining a good score with any bureau requires careful financial management and regular monitoring.

By staying informed and proactive about your credit health, you can make better financial decisions and enhance your credit profile, leading to more favourable lending terms and financial opportunities.

For further guidance on managing your credit score and CIBIL score, consider consulting financial experts or using credit monitoring services to stay on top of your financial health.