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Understand CIBIL Score

Last Updated 22nd Oct 2016

    CIBIL Score in India

  • CIBIL Score or Credit Score is a three-digit number ranging from 300-900 which summarizes your credit history.
  • Banks use CIBIL Score to judge your credit worthiness and decide your loan eligibility. A high CIBIL score provides you with higher eligibility for loan and at competitive interest rate. CIBIL Score of 700 and above is generally considered as best CIBIL Score by banks. 90 percent of loan sanctioned have CIBIL Score greater than 700. The acceptable Credit Score differs according to the loan type applied for and the banks internal credit policy criteria. Maximum CIBIL Score to get loan from any bank is 900.
  • The important factors that determine CIBIL Score are -

Past Payment Track Record

  • Repayment track record of all your past debts
  • Consistent track record of meeting payments on timedrives a higher score
  • Delayed payments lead to a lower score 
  • More recent the delays, more the negative impact

Past Defaults, Settlements, Write-offs

  • Write-offs recorded by lenders on past debts pull down your credit score 
  • Recent write-offs are viewed more negatively than the older ones
  • Multiple write offs lead to a significantly lower credit score
  • Defaults or delays in repaying secured loans (e.g. home loans) are viewed more negatively than those on unsecured ones (e.g. credit cards)

Secured Loans Vs. Credit Cards and Unsecured Loans

  • Greater reliance on unsecured loans (credit cards, personal loans) as opposed to secured loans is viewed negatively
  • Fewer of such accounts with regular payment history support a higher credit score
  • High balances (as proportion of total limit) on credit cards drive down credit score

Loans as Proportion of Income

  • High loan balances (as proportion of income) tend to pull down score
  • Low balances indicate healthy credit usage habit and lead to a higher score

Loan Enquiries

  • Too many loan enquiries made for availing loans in the recent past reflect a “credit hungry” behavior and affect the score negatively

    What is a good CIBIL Score?

  • There is no good or bad score per se but it is found that lenders tend to avoid or be extra cautious granting credit to borrowers with a score less than 700 with CIBIL for secured loans like home loan. For unsecured loans like personal loan and consumer loans, banks in India tend to target customers with a score of 750 or above. Estimate the impact of CIBIL Score Scale from 300 to 900 on your credit health.
CIBIL Score Range What it may mean for your credit health?
750 - 900
  • Excellent Score reflecting impeccable and consistent past repayment track record
  • You are likely to get loans at most competitive interest rates from best banks
  • Subject to eligibility and credit report, you should be able to easily obtain secured loans like home loan and car loan and unsecured loans like personal loan and credit cards
700 - 750
  • Fairly good score reflecting fair past repayment track record
  • You are likely to get loans at competitive interest rates from banks
  • Subject to eligibility and credit report, you should be able to easily obtain secured loans like home loan and car loan.  Before sanctioning unsecured loans like personal loan and credit cards, banks are likely to conduct further credit analysis
550 - 700
  • Lower score reflecting some delays or irregularity of loan repayment in the past
  • Many lenders may avoid sanctioning you loans except with significant credit check
  • Banks and finance companies may still consider your loan application subject to high collateral and low LTV
  • Interest rates offered may be relatively higher
300 - 550
  • Reflects a history of multiple delinquencies and/ or over leverage
  • Your credit report is likely to list more than one write-offs/ settlements/ overdue payments
  • Extremely difficult to obtain loans from organized lenders

    How to increase CIBIL Score?

  • Pay all bills and EMI’s regularly and on time; prefer ECS so that you don’t miss payments
  • Keep overall borrowing manageable and don’t borrow more loans than you can service
  • Keep fewer number of loans, particularly credit cards and personal loans
  • Don’t keep too many credit cards. Prefer using debit cards instead of credit cards
  • Prepay loans when you have surplus funds
  • Keep a check on your credit report periodically and correct any mistakes
  • In case of dispute with a bank regarding a loan or charges, contest the case but do not stop paying EMI’s
  • Don’t make too many loan applications for availing one loan. It is better to seek professional help and apply only with banks where your chances of sanction are higher
  • Avoid giving guarantees for loans by unknown people
  • Avoid registering add-on users on your credit cards

    Free CIBIL Score?

  • Your exact score is available online in your CIBIL report. However, to know your exact CIBIL credit score online, you must access your CIBIL report online at by paying Rs. 470.
  • You can estimate your credit score using MyLoanCare credit score estimate for free by giving details of your current and past home loans, vehicle loans, personal loans and credit cards. Note that this is only an estimated free score and the actual score may be different. For getting the actual score, please visit CIBIL website.

    Low CIBIL score – Reasons?

    Here can be many reasons for a low CIBI score. These can be classified into two types based on the nature of the reason for low score. Low score due to errors by bank:
  • Wrong credit info provided by banks
  • Record not updated even after customer has paid
  • Lenders classifying a/c as “settled with loss” while actually the dues were disputed
  • Lenders showing amount as “overdue” even when the demand is contested by the customer
    Low CIBIL credit score due to past behavior of borrower:
  • Write offs reported, particularly in last 2-3 years on unsecured loans and credit cards
  • Outstanding credit card dues
  • Delay in payment of EMI’s on home loan, loan against property, personal loan, consumer loan, gold loan or any other loans
  • Too many loans already availed
  • High credit availed on credit cards
  • Too many loan applications made in the recent past

    Good CIBIL Score – Why do I need it?

    It is advisable to check your CIBIL before applying for a loan. A low Credit score may hurt your chances of obtaining a loan. At times, small issues with your credit history due to past loans can easily be resolved. A clean credit history makes it relatively easy to avail new loans and at a competitive rate.
  • Some borrowers take loans from banks but then either don’t pay it back at all or delay paying it back or pay back only partially
  • In order to avoid giving loans to such people, lenders check a potential borrower’s credit history before approving a new loan
  • A history of availing excessive credit or defaults or delays makes lenders wary of extending credit to such customers
  • This information is captured in credit information reports compiled by CIBIL and other credit bureaus
On the other hand, a history of availing too much credit or defaults or delays or partial write-offs makes lenders wary of extending credit to such customers. This information is captured in credit information reports compiled by CIBIL and other credit bureaus.
Sometimes, your CIBIL report may either be incomplete or incorrect. In case your loan application has been rejected or held up due to an issue with your CIBIL report, you must check why this has happened to resolve the underlying issue.

    Difference between CIBIL Score, Credit Score and Cibil Transunion Score?

  • CIBIL Score is the there digit credit score of a loan customer calculated by CIBIL, the largest credit agency in India.
  • Similarly, other credit agencies like Highmarks, Equifax and Experian also calculate their respective credit scores and these are referred to as Highmarks Credit Score, Equifax Credit Score and Experian Credit Score respectively.
  • The scores may vary between the various agencies due to difference in history available with them and different weigtages assigned by them.
  • CIBIL Transunion Score is the same as CIBIL Score.
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