CIBIL Score is a summary of the three-digit numeric credit history. The Score comes by using the credit history found in the CIBIL Report, which is also known as CIR, i.e., Credit Information Report. CIR is an individual’s credit payment history beyond the loan types and credit institutions over a period of time.
CIBIL Score Changing
The CIBIL Score generates a scoring algorithm that takes into account a large number of data points and macro-level credit trends. The periodic changes to the algorithm need to be done to incorporate the new data points and trends to make CIBIL Score more comprehensive. And continue it to improve the Score’ Score’s ability to predict the probability of default of the loans, a consumer’s credit-worthiness, and his/her interest in repaying a loan.
The new CIBIL Score will give the different benefits every time of the credit lifecycle. The consumers who already took loans in the past, the new CIBIL Score, will help them to provide a good picture of their credit behavior. It can be achieved by increasing the duration of credit and repayment history of taken into account to generate the Score. By increasing the attention with which the lenders can conclude the chances of loan default. The new CIBIL Score will make the lenders give the credit more often and at better terms.
New CIBIL Score is different from old CIBIL Score
The new CIBIL Score is between 300 and 900 and the same range as the old CIBIL Score. As the scoring algorithm, it generates the CIBIL Score gets revised. The numeric value created for the new CIBIL Score might be different from the numeric value, which is generated for the old CIBIL Score.
The Score is dropping without any default in your loans
The difference between the numeric value of the new CIBIL Score when compares to the old CIBIL Score is because of the differences in the scoring algorithms that are used to generate each Score. That’s why even with the same data on the CIBIL Report can leads to the generation of a lower numeric value for the new CIBIL Score when compared to the older version. The drop in the numeric value of the new CIBIL Score doesn’t mean that the user credit profile has declined, and it should not leads to any change in the way lenders view the credit application.
The difference in the new and old CIBIL Score
The differences in the numeric value of the new CIBIL Score as compared to the old CIBIL Score are different due to the scoring algorithms that are used to generate each Score. So, as a result, the same data on the CIBIL Report can leads to the generation of a lower numeric value for the new CIBIL Score as compared to the older version. The drop in the numeric value of the new CIBIL Score doesn’t mean that the credit profile has decreased, and it will not lead to any change in the way lenders view the credit application.
The new Score impacts the loan eligibility
The new CIBIL Score is between 300 and 900, which is the same range as the old CIBIL Score. When the scoring algorithm generates, the CIBIL Score is revised then the numeric value created for the new CIBIL Score might be different from the numeric value generated for the old CIBIL Score.
The new CIBIL Score should never impact the lenders’ decision to approve or reject the loan application. It is clear that always refer to the lenders’ credit policies.
The difference between the score bank has and one the user has on his/her CIBIL dashboard
The CIBIL Score is one of the parameters which is considered by the lenders when they review the credit application. All the member banks and credit institutions are processing to migrate to the new CIBIL Score. During the recalibration, exercise is going on, and the migration is still in progress as some of the members will continue to use the older version of the CIBIL Score. So, the Score that the lender pulls during the evaluation of the loan application might be different from the CIBIL Score that a person sees on their dashboard. The difference should not have any impact on the lenders’ decision to approve or reject the credit application.
When all the member banks and credit institutions have migrated to the new CIBIL Score, then there will be no longer any difference in the CIBIL Score that the bank has and the one that a person sees on their CIBIL dashboard.
The factors which affect the new CIBIL Score
In addition to the factors like credit utilization, payment history, credit applications, and credit mix, the new CIBIL Score also adds the new variables such as-
- Depth of credit – It is the duration of the existing credit history as calculated from the date when the oldest credit account was opened.
- There is a long term trend of outstanding balances.
- There is a transaction history on the credit cards.
- The ratio of actual repayment amount to the total amount due
- If there are many new accounts opened and the number of accounts closed.
The absolute value, as well as the qualitative characteristics of these factors in the credit report, can have both a positive or negative impact on the new CIBIL Score.
What a person has to do to see the new CIBIL Score?
The new CIBIL Score has already come in the CIBIL dashboard. So a person has to login to their dashboard by using their username and password to see the new CIBIL Score. A person will be able to see the new CIBIL Score every time whenever they refresh their CIBIL Score and report.
The user will get the new CIBIL Score with their free annual credit report.
Is the old Score is visible?
Only the latest CIBIL Score is visible on the dashboard. Therefore, the Score displayed on the dashboard right now is the new CIBIL Score. A person can see their older version CIBIL Scores (up to 12 months) in the score history section of the dashboard with their active CIBIL Score subscription plan.
How to see all the versions of CIBIL Score?
The latest CIBIL Score, which displayed on the dashboard, is the new version of the CIBIL Score. A person can’t change or select the version of the CIBIL Score on the dashboard. All the member banks and credit institutions are in the process of migrating to a new CIBIL Score, and when the migration is complete, then there will be a single version of the CIBIL Score, which is used by everyone in the market.
With an active CIBIL Subscription, a person can see their CIBIL Scores (older version) refreshed up to 12 months in the Score History section of the dashboard.
The credit summary feature is designed to provide a quick summary of the most important aspects of the CIBIL Report. There are no changes in the data presented in the Credit Summary feature.
Changes in the Score Analysis
The new CIBIL Score comes with the Score Analysis. Score Analysis explains specific factors impacting the CIBIL Score that can be improved. The algorithm is used to calculate the new CIBIL Score, which takes more of the factors into account to calculate the Score. Score Analysis is provided with the new CIBIL Score includes explanations on more factors to help the person to understand the Score better.
How to improve the Score?
A person can improve their CIBIL Score by maintaining a good credit history, which is important for loan approvals by lenders. A person has to follow the six steps that will help them to better their Score:
- Always pay the dues on time: If a person is making a late payment, then the lender sees it as negatively.
- Keep the balances low: Always be careful not to use too much credit, control the utilization.
- Maintain a healthy credit mix: A person should have a better healthy combination of secured (like home loan, auto loan) and unsecured loans (like personal loans, credit cards). If a person has too many unsecured loans, then it will be visible as negatively.
- Apply for new credit in moderation: If a person doesn’t want to reflect its continuous search of excessive credit, then they can apply for new credit cautiously.
- Monitor the co-signed, guaranteed, and joint accounts monthly: In co-signed, secured, or jointly held accounts, a person is held equally liable for missed payments. The person’s joint holder’s (or the guaranteed individual) negligence can affect their ability to access the credit when they need it.
- Review the credit history frequently throughout the year: A person has regularly do monitoring to their CIBIL Score and Report so they can avoid unpleasant surprises in the form of a rejected loan application.
Addition of new information to the CIBIL report
There is no change in the information in the CIBIL Report. The only thing that has changed is the way the information is used by the algorithm to calculate the CIBIL Score.
If a person finds any inaccuracies in their CIBIL Report, then they should immediately raise a dispute on the relevant section by clicking on the Raise a Dispute link in their CIBIL dashboard. The process for resolving the dispute will be the same as earlier.
The dashboard also has a population ranking section, which illustrates that where a person stands based on their CIBIL Score in comparison to the other consumers for whom the CIBIL Score is available. The population ranking is displayed on the dashboard and is based on the new CIBIL Score.
Does the new Score affect the offers that a person sees in the Personalized Loan Offers section?
The personalized loan offers section on the dashboard provides the loan offers from the lender’s basis on the person’s credit eligibility. The factor used to calculate the credit eligibility is the person’s CIBIL Score. The criteria for the loan offer available in this section is revised to incorporate the new score cut-offs, which is provided by participating members based on the new CIBIL Score.
Alert didn’t receive when Score changes
The objective of the Score change alert is to give notification to the person of any changes in the Score, which might be triggered due to data reported on the person’s CIBIL Report such as late payments, new credit applications, etc. The new CIBIL Score displayed on the dashboard might have a different numeric value as compared to the old CIBIL Score. The difference in scores does not signify any change in the underlying credit profile. That’s why no alert has been sent when the new CIBIL Score was automatically refreshed, as the same data on the CIBIL Report can still lead to the different numeric values for the new and old CIBIL Scores. This difference is due to the differences in the scoring algorithms, which are used to generate the two score versions.
Note: The person will receive an alert notification for any consecutive changes in their new CIBIL Score.
The updated Score Simulator features to incorporate the new CIBIL Score. So from now, whenever a person uses the Score Simulator to simulate a credit behavior and check the probable impact on their new CIBIL Score, then the simulated Score will be based on the new algorithm.
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