How is Your CIBIL Score Calculated?

By | October 14, 2015



The first thing that doctors do when you walk in for a routine checkup is monitoring your blood pressure. A blood pressure rating of 120/80 is considered to be a universally accepted rating signifying that you’re healthy. Any rating above or below that figure means your physical health needs improvement.

Similarly when you walk in to a bank, to request for any financial needs like credit card or a loan, the first thing a bank or NBFC does is to check your credit score. Your CIBIL score shows your financial health.

What exactly is CIBIL?

CIBIL, or Credit Information Bureau of India Ltd., is India’s first credit information company that collects and maintains record of all individuals and corporate entities. CIBIL is licensed by the RBI and governed by the Credit Information Companies (Regulation) Act of 2005. Banks and NBFCs use CIBIL scores as a barometer to check your credit worthiness before approving or denying you a credit line.

CIBIL and credit score

CIBIL uses its in-house patented algorithm to give out a three digit credit score. This credit score is derived using your previous financial history, including loan repayments, repayment history, late payments, cheque bounces, your credit usage etc.

Based on these parameters, CIBIL offers your CIBIL TransUnion Score. The score is in the range of 300 and 900. The closer your score is to 900, the more secure you are in terms of your financial health.

Parameters involved in your CIBIL score calculation

Your CIBIL score is made up of a number of smaller parameters, all of which are assigned a particular weightage. Your repayment history holds the majority share of 35% in calculation of your CIBIL score. This means that if you regularly make late payments, or default on your EMIs or other dues, you are lowering your CIBIL score as a result.

The utilization of your credit holds 30% importance in determining your overall CIBIL score. The credit utilization ratio defines whether your credit utilization is up to the mark or not. The outstanding balances on your credit cards, compared against the overall your credit limit, measures your credit utilization ratio. The higher your credit utilization, the lower your CIBIL score can be.

The amount of time you hold credit accounts for another 15% of the CIBIL score calculations. A longer credit history can actually help you get a higher CIBIL score, provided you have been making timely repayments.

Enquiries on credit from banks and NBFCs are given 10% significance when determining the final CIBIL score. If you are regularly seeking loans and credit cards, it can damage your CIBIL score, as you may be seen as a credit hungry individual.

Here is a breakup of the percentage wise allocation for various financial factors that are considered while deriving your final CIBIL score.

Payment History 30%
Credit Usage 30%
Duration of account 15%
Account Type 15%
Enquiries for credit 10%


Is no credit history =a good credit score?

Having no credit, and thereby, no credit history may be a good thing morally, but without any credit you will have no record of your repayment history.

When you approach a lender, the lender will check your CIBIL score and without any apparent history, your CIBIL score will be marked as ‘NA’ or ‘NH’, suggesting ‘no record’. Such scores are viewed negatively by lenders. With no credit history to gauge you, you may be considered as an unsafe bet to extend any credit.

Additional Read: 4 Habits that can Hurt Your Credit Score

Reading CIBIL score

Though the CIBIL scores range from 300 to 900, it doesn’t mean that your score starts at 300. Your CIBIL score actually starts somewhere in the middle, between 300 and 900, and then reaches its apparent value as per your repayment history and other financial credentials.

The higher the reading, the healthier your score is. On an average, ranging 700 and above is considered as good. If your score is between 600 and 700, still you have a good chance of credit acceptance. But if your score is below 500, chances are much lower for getting a loan, and an immediate attention for credit repair is required.

Additional read: 7 Ways to Murder Your Credit Score

How can I get my CIBIL score?

It is a good idea for you to check your CIBIL score before approaching a lender.

  1. You can download the form to request your CIBIL score online
  2. Once you fill up the form, you will need to attach your identification documents, like PAN number, passport etc.
  3. After uploading the identification documents, you will be directed to a payments page where you will need to furnish the payment of Rs. 500 for obtaining your CIBIL TransUnion Score (including CIR).
  4. On successful payment, you are allocated with a unique CIBIL registration id.
  5. The system then generates 3 questions linked to your credit history and on successfully answering them along with confirmation of your CIBIL registration id, your CIBIL score card is processed.
  6. You will then receive your CIBIL score card in your email within 4 working days.

Additional read: 6 Ridiculous Credit Score Myths Busted

CIBIL score is an important barometer of your financial health. Always strive to maintain a healthy CIBIL score so that your loan or other credit facilities do not suffer any unwarranted rejections.


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