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How is the Calculation of CIBIL Score Done?

CIBIL is a three-digit numeric code that provides the creditworthiness of an individual or company. This score ranges from 300 to 900, where 300 is the lowest and 900 is the highest. Various leading institutions rely on this score for determining the eligibility of an applicant. The credit bureau – TransUnion CIBIL Limited, generates the CIBIL score with the help of credit history provided in the Credit Information Report. This report contains information such as payment history of credit, facilities of the overdraft, history of credit cards over a specific period of time.  

If we talk about TransUnion CIBIL Limited Company, then it is one of the most prominent credit bureaus. The company was formerly known as Credit Information Bureau (India) Limited and was established in the year 2000. This credit bureau maintains the records of all the activities that are credit related such as credit cards of an individual and the loans taken by him/her. The financial institutions submit these records on regular intervals and as per the data, the scores and reports are issued by the credit bureau.

Calculation of CIBIL Score

The credit bureau considers the following factors to calculate the CIBIL score of an individual:

  • Credit History: The repayment history of credits pays the major role in deciding the CIBIL score of an individual. The financial institutions and banks send all the credit-related information, like payments of the EMIs and bills every month to the credit bureau. The credit report shows the status of every account of an individual. It contains the records such as whether an account is settled, left outstanding, or written off. This report also mentions all the details related to any past dues. If a person has ever skipped or delayed an EMI of the payment of credit card, then it is reflected on the credit report and may drop the CIBIL score. To avoid this to happen, ensure this does not happen.
  • Credit Duration and Mix: The type of credit that one has taken whether secured or unsecured, and credit history's duration plays a major role in determining his/her CIBIL score. If the proportion of the unsecured credit such as credit cards and personal loans is high in an individual’s credit, then he/she is considered as a riskier borrower. On the other hand, has an increased share of secured credits like car loans, home loans, etc. will help an individual to increase his/her CIBIL score. If one holds various unsecured and secured credits and is thinking to pre-pay them, then it is suggested to start with unsecured credits. In addition to this, the duration for which one is servicing a specific kind of credit is also taken into consideration when calculating the score. Suppose, one is holding a loan for a longer period of time and is making timely payments, then this may increase the CIBIL score.
  • Utilization of Credit: Utilization of credit is the credit’s amount that one is using against the total credit that is available to him/her. The ideal credit utilization does not exceed 30%. One is required to ensure that his/her rate of credit utilization goes down within some time as it also helps to boost the CIBIL score. This can easily be done by paying more than the minimum required on the credit card each month and increasing one’s credit limit. Switching to debit cards or preferring to cash for day to day purchases can also lower the rate of credit utilization.
  • Hard Inquiries Number: With all the above-mentioned factors, the number of times one applies for credit also plays a major role in the calculation of credit or CIBIL score. Every time one applies for new credit, it is recommended to keep in mind that the institution from which one is asking for credit will make a hard inquiry. This hard inquiry runs on the CIBIL score of the applicant to know about his/her credit behavior. In this way, the hard inquiries also leave an impression on the CIBIL score of an individual. The best to avoid this is to apply for the credit with those institutions from which one is sure to get acceptance.

The Requirement of CIBIL Score While Applying for Loan

The higher the CIBIL score of a person, the better the chances for him/her of getting loan and credit card. A good CIBIL score is one that is closer to 900. Most of the banks and financial institutions accept the applications of the individuals who have CIBIL score 750 or more. Below steps mention how the loan approval process works while one applies for loan:


  • Step 1: One has to fill the credit application form and give it to the financial institution.
  • Step 2: The financial institutions look at the CIBIL report and CIBIL score of the applicant.
  • Step 3: If the financial institutions (basically lenders) find the CIBIL score of the applicant as low, they turn down his/her application.
  • Step 4: On the other hand, if the CIBIL score of the applicant meets with the minimum requirement of the lender, then the financial institution may proceed with the eligibility checking with the submitted documents of the applicant.
  • Step 5: However, if the submitted documents do not meet with the eligibility criteria of the applicant, then the application can be turned down. On the other hand, if the submitted documents match the requirements of the lender, then the credit application is approved.

CIBIL Score Calculation – FAQs

Q 1: What is a CIBIL report and CIBIL score?

CIBIL score is a three-digit numerical code that represents the creditworthiness of an individual. The CIBIL score ranges from 300 to 900 wherein 300 is the lowest and 900 is the highest score. This CIBIL score is derived from the information mentioned in the CIBIL report. 

On the other hand, the CIBIL report carries all the credit-related information of an individual such as the payments that one has made, an individual's borrowing history, etc. Most of the financial institutions check this report to confirm the credit behavior of that person. 

Q 2: How does the mix of credit impact the CIBIL score?

The type of credit that one takes varies from secured to unsecured credit types and these types play a major role in determining the CIBIL score. If a proportion of unsecured credit such as EMIs of credit card and personal loans is high in an individual's credit type, then he/she is seen as a riskier borrower. On the other hand having a good proportion of secured credit such as car loan, home loan, boots the credit score of an individual, provided one makes the repayments of these loans on time. 

Q 3: What is the role of CIBIL score in the loan approval process?

The higher is the CIBIL score is good it is considered. So if one’s CIBIL score is near 900, then the better are the chances of approval of credit or loan application of the applicant. Most of the financial institutions and banks approve applications of those who have CIBIL score 750 or more. 

Q 4: Define the factors that are taken into consideration while determining the CIBIL score of an individual?

The factors that are considered by the credit bureau for determining the CIBIL score:

  • Credit mix
  • History of repayment
  • Duration of the credit held
  • The number of hard inquiries made
  • Utilization of credit rate 

Q 5: Does a missed payment affect CIBIL score?

The repayment history plays the biggest role in the calculation of CIBIL score. Therefore any missed payment can show major repercussion on the credit history of a person.