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The credit rating company TransUnion CIBIL calculates credit score based on the ‘Accounts’ and ‘Enquiry’ section of a CIBIL report. To know how credit score is calculated in India, check the key points below.

​​1. Payment history

When it comes to credit score and particularly CIBIL score, Payment history weighs the most. If you have been paying your outstanding dues such as loan EMIs and credit bills in a timely manner, then your CIBIL score increases. On the contrary, if you are irregular in your payments or have defaulted even once, it affects your CIBIL score negatively.

2. Credit Exposure

Also known as the credit utilization ratio, credit exposure is the second biggest factor after payment history, influencing your CIBIL score. It is simply the amount of credit you use in proportion to the credit limit allocated to you. Experts recommend keeping the spending under 30% of your credit limit to have an optimum contribution to the CIBIL score.

​​3. Credit Type and Duration​

It is recommended to have a healthy credit mix of secured and unsecured credits such as personal loans and credit cards. Not just that, you should have a long history of timely repayments in order to boost your CIBIL score. The trick is to take credit in an early age when you are most likely to repay easily.

4. Hard Inquiries

Lenders obtain your CIBIL report from credit rating agencies whenever you apply for credit, such as a Home Loan or a credit card. Such inquiries fall into the category of hard inquiries, Multiple hard inquiries hurt your CIBIL score. Hence, avoid applying for multiple credit lines simultaneously.

These four factors play a key role in how CIBIL score is calculated in India.

Conventionally, a CIBIL score of above 750 is considered ideal for approval for any credit. However, for unsecured credits such as personal loans, a higher score may be required to compensate for the absence of collateral. On the other hand, for secured credit such as Home Loans, a CIBIL score of 750+ guarantees prompt loan approval if other eligibility criteria are in place.

Your CIBIL Score How it translates to the lender
800 - 900 An excellent score range that Indicates that you have never defaulted on your EMI and credit bills payment.
750 - 800 A very good CIBIL score. You can now negotiate and bargain on your interest rate. 
625 – 750  You have a decent credit history with very few irregularities. You may get a loan but at a higher interest rate. 
300 – 625 This score indicates high frequencies of defaults and irregularities. You may find it very difficult to get a loan unless you improve your CIBIL score. 

Anyone struggling to reach the desired Home Loan CIBIL score can refer to CIBIL score calculation formula and take note of a few tips to improve scoring accordingly. Below are some of the tips to consider.

  • Clear existing debts and pay credit card bills and EMIs on time
  • Keep credit utilisation ratio below 40%
  • Maintain a healthy mix of secured and unsecured credits
  • Limit credit inquiry to a minimum
  • Mention all income sources
  • Try to keep FOIR below 50% 

These factors improve CIBIL score and increases loan eligibility. With a high CIBIL score, individuals can enjoy competitive interest rates and better loan terms. Therefore, CIBIL score calculation helps borrowers improve CIBIL score after knowing the factors that affect their score.

*Terms and conditions apply

Frequently Asked Questions

Frequently Asked Questions

​​Credit Information Companies calculate and generate CIBIL scores basis the consumer credit information provided by member lending institutions to them on a monthly basis.​

​​No, credit score is calculated on a monthly basis.​

​​ A credit score in the range of 750 to 900 shows an exemplary credit history.​

​​​Yes, a loan rejection will have a negative impact on your CIBIL score.​​​​


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