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  • How Is Your CIBIL Score Calculated?

    A CIBIL score is a 3-digit number that assesses your creditworthiness. It has a range from 300-900 and is calculated by the TransUnion CIBIL credit bureau after taking into consideration several factors.

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  • Your CIBIL score is made up of four factors and each of them have a weightage.

    Payment History 30%
    Credit Exposure 25%
    Credit Type and Duration/ 25%
    Other Factors 20%
    1. Payment History

      Payment history is one of the biggest factors that can affect your CIBIL score in a positive or a negative way. If you pay your outstanding bills associated with your credit cards and loan EMIs on time, it will boost your score. And if you delay payments or miss payments, it will reduce your score. Hence, such payment behaviour should be avoided to keep your score high. A CIBIL analysis reported by the Financial Express reveled that a 30-day delinquency can reduce your CIBIL score by 100 points.

    2. Credit Exposure

      Credit Exposure which is also known as the credit utilisaiton ratio is the second biggest factor that affects your CIBIL score. Credit utilisation ratio is the amount of credit used by you in proportion to your available credit limit. As per experts, you should ideally use up to 30% of your total credit card limit. A high credit utilisation ratio suggests you are credit hungry and are struggling with your finances. As a result of heavy credit usage on your credit cards, lenders could think that you are at a high risk of turning into a defaulter, leading to subsequent application rejection.

    3. Credit Type and Duration

      Having a long credit history suggests that you have experience in handling credit. Credit history refers to the number of years that have passed since you have opened your first credit account. Therefore, it is advised to start building credit history at an early stage as it comes in handy when you are planning to buy a house or a car in the future, requiring higher loan amounts.

      The type of credit is also considered while calculating your CIBIL score. It is important to maintain a healthy balance of secured (e.g. home/auto loan) loans as well as unsecured (e.g. credit card) loans. When you have secured as well as unsecured credit in your credit report, it suggests that you have good experience in handling both types of credit.

    4. Other Factors

      Another factor that is a part of your CIBIL score calculation is hard inquiries. When you apply for credit such as a loan or a credit card, lenders pull out your CIBIL report from the credit bureau. Such an inquiry is called a hard inquiry and multiple such inquires will have a negative effect on your score. You should avoid applying for multiple lines of credit at the same time.

    It should be noted that your CIBIL score is one of the factors considered by lenders while sanctioning your application. Therefore, you should take necessary measures to maintain a high credit score. At present, there are several lenders who offer preferential pricing to consumers who have a healthy CIBIL score. With a high score, you have the power to negotiate better deals on credit cards and request for lower interest rates for loans.

    What is the Ideal CIBIL Score you Should Have?

    CIBIL Score Range Meaning
    750 - 900
    • This shows that you have an exemplary credit history.
    • It is easier for you to get a home loan, personal loan, credit cards and other unsecured loans with a credit score within this range.
    • It also means that you have a consistency of frequent and timely repayments.
    700 - 750
    • If you have a CIBIL score within this range, it means that you have a great track record of making repayments on time.
    • However, the banks will conduct some more credit analysis and this will be based on their internal credit policies.
    550 - 700
    • This would mean that you have a few irregularities with your past payments.
    • Banks may think that it is a little risky to give you a loan.
    • A few banks may consider you eligible for a loan but they will ask for a high collateral and interest rate.
    300 - 550
    • This means that you have a lot of defaults like past delinquencies, write offs, and also, over leverage. You will find it difficult to get a loan.

    Ideal CIBIL Score Rating Loans

    Loan Ideal CIBIL Score
    personal loan Above 700
    Home Loan Above 650
    Loan against Property Above 650
    Car Loan Above 700
    Business Loan Above 700
    Gold Loan Not Required

    How to Remove my Name From CIBIL Defaulters’ List?

    • You should note that CIBIL will not publish a defaulters list.
    • However, if you are a defaulter, then this will be reflected on your CIBIL score and also your report.
    • A low score means that you will be less likely to get a loan approved from the banks and NBFCs. If a payment default or delayed payment has been marked in your report, then, this will affect your chances of getting a loan.

    How to Check CIBIL Score Online?

    1. Visit the website, https://www.cibil.com/creditscore
    2. Select ‘Get Your Credit Score’. You can also click on ‘Check my CIBIL score’.
    3. Select your subscription product.
    4. Type in your identity proof details
    5. Select ‘Proceed to Payment’.
    6. Make payment for the same
    7. Your CIBIL report and your score will be sent to your email

    How do I Check CIBIL Score by PAN Card?

    1. Visit the official CIBIL website
    2. Type in your PAN card details
    3. Select ‘Submit’
    4. Select ‘Proceed to Payment’.
    5. Make payment for the same
    6. Your CIBIL report and your score will be sent to your email

    Improving Your CIBIL Score

    Use credit responsibly:

    • You have to repay the amount borrowed to your lender, with or without interest, depending on the type of credit line, and your repayment behaviour.
    • So, avoid borrowing more than you can afford to repay.
    • Use your credit card, loan amount, or any other type of borrowing wisely.

    Avoid late or missed payments:

    • Apart from being charged late payment fees, the repayment behaviour will also get reported to the credit bureaus, and this will affect your credit score.
    • If you have multiple credit card payments and loan EMIs to make, it is advised to set up payment reminders or due date alerts to get more organised.

    Maintain a low credit utilisation ratio:

    • You should not exceed 30% of your total credit card limit. This is especially important if you apply for a home loan.
    • When you apply for a home loan, banks will assess your debt-to-income (DTI) ratio. The ratio evaluates your total debt with respect to your total income. If your debt exceeds 50% of your income, banks are more likely to reject your application.

    Make sure to close accounts:

    • If you have defaulted on any payments in the past, it will be reflected in your credit history and will bring your CIBIL score down.
    • Make sure to pay off the unpaid amounts and close the account instead of opting for a settlement. You should ensure that the account gets a 'closed' status.

    Review your credit report:

    • You should check your credit report periodically to understand your credit health. This should be done to ensure that your credit report is free of any errors related to your credit accounts.
    • This is important because any incorrect information recorded on your report could bring down your score through no fault of yours.

    FAQ's on CIBIL Score Calculation

    1. Is my credit score and my CIBIL score one and the same thing?
    2. Yes, your credit score and your CIBIL score are the same. The Credit Information Bureau (India) Limited was the very first credit bureau in the country and so, CIBIL score was a term that was used synonymously with the term, credit score.

    3. Does SBI have its own CIBIL score?
    4. SBI does not issue credit scores for its customers. The CIBIL is the credit bureau which collects information from and NBFCs about people and they then calculate the credit score.

    5. How can I check my CIBIL score online at no cost?
    6. If you want to check your CIBIL score with paying any money, you can search for cibil website on the internet. You should then fill in all details and once you submit this, you will be able to see your credit score.

    7. What is the best CIBIL score for me to get a loan?
    8. You should have a minimum CIBIL score between 650-700 to get a loan.

    9. Will a loan rejection affect my CIBIL score?
    10. Yes, a loan rejection will lower your CIBIL score.

    CIBIL Related Articles

    TransUnion CIBIL is one of the leading credit information companies in India. The company maintains one of the largest collections of consumer credit information in the world. CIBIL Score plays a key role in the lives of consumers. Banks and other lenders check the CIBIL Score of the applicants before approving their loan or credit card application. Consumers can visit the official website of CIBIL to check their CIBIL Score and Report. CHECK YOUR CIBIL SCORE now.

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