The three-digit Cibil score of retail borrowers will not be impacted if they opt for a moratorium on an outstanding term loan.

Credit information company TransUnion Cibil said it would take a long-term view on the credit history of the borrower based on inputs from the lenders in building the score.

But the company also said that the borrowers should be wary of the post moratorium repayment burden that could affect their credit scores in the future.

A Cibil score is calculated based on the credit behaviour of a borrower and is used by banks and financial institutions to check on the credit history of an individual before sanctioning a loan, including credit cards. The score ranges between 300 and 900 and above 700 is generally considered as a good score.

Several factors such as outstandings, secured and unsecured credit and income to EMI ratio are considered to prepare the score.

As part of Covid-19 relief measures, the RBI has permitted lending institutions to extend the moratorium on term loan instalments by another 3 months from June 1, 2020 to August 31, 2020. The regulator had earlier given a three-month relief on the payment of EMIs for March, April and May. However, a moratorium is not a waiver and interest will continue to be accrued.

“The moratorium will not impact the score of the individuals. From Cibil score perspective its important we don’t look at data for just these months but over a longer tenure,” said Sujata Ahlawat, vice-president and head-direct to consumer interactive, TransUnion Cibil.

While there is no immediate impact, the long-term credit score may take a hit if the repayment becomes a challenge in the post moratorium period.

“If the borrower opts for a moratorium, the impact is much high as the interest will get accrued and has to be paid in the end. If at that stage, the borrower is not able to pay the credit score will be impacted. So, our recommendation is that if funds are available, borrowers should not opt for moratorium,” said Ahlawat.