When lenders evaluate an individual’s loan application, the CIBIL score is one of the prime factors they take into consideration. One must henceforth be aware of how the CIBIL score is calculated.



It is with the use of a proprietary algorithm that the CIBIL score is calculated. The most important part of the score composition is the individual’s loan payment behavior.


CIBIL score is characteristically a 3-digit number that summarizes one’s credit history. This is calculated using the information that prevails in the Enquiries and Accounts section of one’s CIBIL reports. This information, in most cases, pertains to one’s credit cards or loan accounts. Their payment history is taken into consideration, and so are the days past due of the outstanding amounts.

The score may hence be seen as a reflection of an individual’s creditworthiness. The lower and top range of CIBIL scores is 300 and 900. The higher one’s CIBIL score, the more likely is the individual to have his loan approved.

79% of loans are approved for individuals who have a CIBIL score of over 750. One can find a loan with lower interest rates and credit cards with additional benefits. Pre-approved loans or those with a longer tenure can be availed with a greater degree of ease.

Top metrics used for calculating CIBIL score:

  1. Payment history

Making payments late, or being a defaulter for EMIs negatively impacts one’s CIBIL score.

  1. Credit mix

Maintaining a balanced mix of unsecured and secured loans positively impacts the CIBIL score.

  1. Multiple Enquiries

Making too many loan inquiries is likely to impact the CIBIL score negatively. It indicates that in the future, one’s loan burden is likely to go up.

  1. Strong credit utilization

When an individual’s credit utilization limits are high, it goes to show a high debt burden over time. This impacts the CIBIL score negatively.

Ways to keep the CIBIL score high

An individual’s CIBIL score has a direct impact on his access to credit for the future. This is even while one’s CIBIL score is based upon past payments and credit history.

It goes to show that one’s actions in the present date define one’s credit footprint. Here are a few of the top tips, which help one maintain a high CIBIL score:

  • It is best to pay your dues on time. Lenders see late payments negatively.
  • Keeping the balances low is preferable. So one must act prudently and keep credit utilization within limits.
  • Loans must ideally be a mix of secured (auto loans, home loans) and unsecured (personal loans, credit cards). Unsecured loans, taken in excess are viewed negatively.
  • Practice moderation when applying for credit. Continual seeking excessive credit must be avoided.
  • Keep a close watch over all your accounts, joint, co-signed, and monitored. You stand to be liable if payments are missed for any of the accounts. Negligence on the part of your joint account holder may reflect on your creditworthiness.
  • Keep a track of your credit history, year-round. By monitoring the CIBIL score and report, one can have a better idea about his eligibility for a loan. By going through the report regularly, easy-to-miss discrepancies come to light.
  • In case one does come across a discrepancy, one can log on to the CIBIL website and log a dispute. Alternately, you may ask the lender to mention the correction to CIBIL.

CIBIL score must ideally be maintained at healthy levels. Even while one pursues his financial goals, one may still require access to credit in the event of an emergency.

Monitoring the credit profile and the CIBIL score brings clarity in this regard. Get started with improving your score today.

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