What is CIBIL TransUnion Score?
The CIBIL TransUnion score is going to radically change the way an individual’s credit history is verified and validated by most lenders for the credit approval and disbursal process. CIBIL (Credit Information Bureau of India) which is almost 7 years into operation now is India’s first credit information agency that provides credit related information to lenders on individuals and institutions across India. Checking the CIBIL credit score for potential borrowers has now more or less become a common norm with most big and small lenders.
To provide a brief explanation what exactly is a CIBIL TransUnion Score, it’s basically an indicative score provided by CIBIL TransUnion on potential borrowers based on their past credit history that can predict the possibility of the customer defaulting on the loan should the lender choose to sanction the loan. The CIBIL TransUnion Score model claims to almost accurately predict the likelihood or probability of the borrower defaulting on the loan based on how well the individual has fared in terms of his or her credit usage, behavior and pattern in the past.
What Exactly Does the CIBIL TransUnion Score Show?
The chart shows the delinquency rate or loan defaulting rate to decrease at scores above 750 while the probability of default keeps increasing with lower credit scores. TransUnion on it’s website claims to have developed this model based on years of expertise in the data analytics field and has built this model after extensive testing and analysis of a considerable amount of sample/test data.
What Does This Mean to a New or an Existing Borrower?
The single biggest factor that new or existing borrowers need to realize is that credit history and score has and will become one of the single most important factor when you approach any financial entity for credit. Borrowers can no longer chose to hide facts regarding their prior credit history because banks now have easy access to individual credit information and every borrower (new or old) should keep in mind the importance of maintaining a healthy credit score.
What Must Individuals Do To Maintain a Healthy Credit Score?
While we don’t know how exactly TransUnion’s scoring model works and what parameters do they consider to arrive at an individuals credit rating, if we go by logic and apply common sense a good credit score is always a byproduct of effective credit utilization and management. Some of the major pointers that individuals need to consider to maintain a healthy credit history are:-
- Paying credit card bills on time. Avoid payment of minimum due as much as possible. This is one of the most difficult aspects to follow and majority of the credit related issues arise out of rampant and uncontrolled credit card spending. Impulsive shoppers please note.
- Avoid cheque bounces.
- Avoid taking unnecessary adhoc loans which might eventually become difficult to service later.
- When we say adhoc loans these are basically pre-approved or spot loans which individuals accept based on certain mental calculations and later on realizing it was a tight call.
- If you have got into a dispute with any financial entity, ensure the dispute is amicably resolved. One of the first thing that happens when you run into a dispute with a financial entity is the mention of your name in the CIBIL database. More often than note even after the dispute is resolved, the same financial institutions fail to take off the name from the CIBIL database.
- Individuals who have possibly run into disputes big or small with any financial entity are strongly advised to check their CIBIL report to verify the facts and get the same corrected.
Can Individuals have Access to CIBIL TransUnion Score?
Yes the CIBIL TransUnion Score is now accessible to individuals as well. You can check for more details as well as apply for a CIBIL report online by visiting here.