Awareness of Credit Score Mechanism in India: A Study with reference to Credit Information Bureau India Limited (CIBIL)

Dr. Saravanan Laxmanan, Dr. Sankara Muthu Kumar Sadayan


The subject of credit scoring has become an increasingly hot topic, and for good reason. For many years, the general public only associated the concept of credit scoring with the need to purchase high-ticket items such as a new car or a home. Today, credit scoring goes much further. The credit score can affect the ability to get a good rate on commodities such as car insurance, cell phones, or even determine whether or not one get the job or promotion that he / she want and deserve.  A credit score is numerical expressions based on a level analysis of a person’s credit files, to represent the creditworthiness of that person i.e. to say the diagnosis of financial fitness/discipline.  In India, many people do not know about the credit scoring system and much less their credit score, until they attempt to buy a home, take out a loan to start a business or make a major purchase.  This study intends to identify the degree of awareness among individuals regarding their very own credit score mechanism, simultaneously realizing its vital importance. It tries to scan that whether, there is a significant association between the monthly income and the respondents’ understanding of credit score and also there is a significant association between credit score awareness and motivation to increase the credit score.  The statistical tool used to test the hypothesis of the credit score awareness has been done by: Chi-Square Test.  The study also reflects a proportional relation between the income of the respondents and their knowledge about their credit score.  The survey showed that most consumers understood the basic concepts of credit reporting and had seen their credit reports but that many lacked knowledge of as to where exactly their credit is put for use and who actually uses it.  It is suggested that financial literacy in terms of being ‘Financially Fit’ and ‘Financially Disciplined’ should be addressed to the consumers so that they are more aware about the worthiness of credit scoring mechanism.  The essence of finance is the prediction of the risk, whether borrowers will keep their promises.


Key words: Credit Score, CIBIL, Financial Discipline, Financial Diagnosis, Credit Report

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ISSN : 2251-1547