Your CIBIL score is an important factor that lenders look at while evaluating a loan application. Hence it’s important to understand how the score is calculated. While there is a proprietary algorithm that determines your CIBIL score, the most important elements of the score composition are based on an individual’s loan payment behavior.
Let’s take a look at what exactly the CIBIL score is, and how it is calculated.
What is the CIBIL score?
Your CIBIL score is a 3-digit numeric summary of your credit history, derived by using details found in the 'Accounts' and 'Enquiries' sections of your CIBIL report, including (but not restricted to) your loan accounts or credit cards, and their payment status, as well as outstanding amounts’ days past due. The score reflects your credit worthiness, based on your borrowing and repayment history, as shared by lenders. Your CIBIL score ranges from 300 to 900 and the higher your score, better are your chances of getting a loan approved. In fact, 79 percent of loans are sanctioned to consumers with a CIBIL score greater than 750.
How is the CIBIL score calculated?
There are four key factors that impact your CIBIL score:
How can you work towards a high CIBIL score?
Your CIBIL score is based on your credit history and past payments, but it subsequently impacts your future access to credit. What you do today can help you build a stronger and healthier credit footprint. Here are a few quick tips to help you improve your score:
As you look to achieve your planned financial goals or in case of an emergency, you may need access to credit. Make sure you monitor your CIBIL score and credit profile regularly to ensure you are credit-ready. Start working towards improving your score today.
Disclaimer: The information posted on this blog (Information) is prepared by TransUnion CIBIL Limited (TU CIBIL). This Information is for generic informational purposes only and is meant for consumer education and awareness about credit scores, credit history and credit reporting. The Information posted on the blog does not constitute credit advice and the user will need to consider the same and take independent informed decisions . No part of this Information may be quoted out of context, distorted ,distributed, published and/ or reproduced in any form and manner whatsoever. Consumers are advised that the Credit Information Reports (CIRs) prepared by TU CIBIL are based on collation of information, substantially, provided by credit institutions who are members with TU CIBIL. TU CIBIL is not responsible and /or liable for errors and/or omissions caused by inaccurate or inadequate information submitted to it by credit institutions. TU CIBIL does not guarantee the adequacy or completeness of the Information and/or its suitability for any specific purpose nor is TU CIBIL responsible for any access or reliance on the Information. TU CIBIL expressly disclaims all such liability. Further, this Information is based on the data available with TU CIBIL at the time of publication and therefore may not be up-to-date.