CIBIL score is a 3-digit number, ranging from 300 to 900, used by lenders to determine your creditworthiness. You must maintain a high credit score all the time to get the best offer on loan or credit card. For CIBIL score calculation, certain things are considered, i.e. your payment history, credit exposure, credit type and duration, and other factors.
A CIBIL Score is calculated by the TransUnion CIBIL credit bureau considering several factors, such as borrower’s payment history, exposure to credit, type and duration of credit, and other factors. Each factor has its own weightage (as mentioned below) when it comes to credit score calculation. Here's a breakdown of the four primary components:
|Payment History||35%||The most significant factor. It reflects your consistency in repaying past and current loans and credit card bills. Timely payments positively impact your score, while defaults, delays, or missed payments can significantly lower it.|
|Credit Utilization Ratio||30%||Measures the amount of credit you're using compared to your total available credit limit. A high utilization ratio suggests potential over-reliance on credit. Maintaining a ratio under 30% is generally seen as favorable.|
|Length of Credit History||15%||This takes into account how long you've been using credit. Older credit accounts, if managed well, can be beneficial for your score as they showcase a longer history of credit management.|
|Type and Number of Credit Accounts||20%||A mix of secured (e.g., home or auto loans) and unsecured (e.g., credit cards or personal loans) credit is favorable. Too many loan applications in a short span can negatively affect your score, as it may indicate a credit hungry behaviour by the borrower.|
Also Check: HDFC CIBIL Score
Also Check: Equifax Credit Score
Additional Reading: Experian credit score
The four common factors that are considered to calculate CIBIL score online or offline are mentioned below:
Additional Reading: Top Credit Rating Agencies in India
Additional Reading: CIBIL Score Meaning
The ideal CIBIL score varies for different types of credits as well as borrowers. The CIBIL score requirement for secured loans is usually lesser than that for unsecured loans. Also, CIBIL score required for salaried borrowers can be lower than self-employed applicants. Below is the range of CIBIL score and its meaning:
Additional Reading: CRIF credit score?
The ideal CIBIL score can vary slightly among lenders based on their risk appetite and the specific loan product. However, a higher score always increases the likelihood of loan approval and getting better terms. Below is a general guideline for the ideal CIBIL score for different types of loans:
|Loan||Ideal CIBIL Score|
|Home Loan||750 and above|
|Personal Loan||750 and above|
|Car/Auto Loan||740 and above|
|Education Loan||730 and above|
|Credit Card||750 and above|
|Loan Against Property||750 and above|
While these scores are considered ideal, it's possible to get approval with slightly lower scores as well, albeit potentially at less favorable terms or higher interest rates. It's essential to note that other factors, such as income, job stability, existing liabilities, and more, also play significant roles in loan approvals.
Also Read : CIBIL Dispute
The process of calculating your CIBIL score for home loan is the same as for personal loan. You can use the credit score loan calculator available online to get a free credit score and report. You can also get the score online through CIBIL’s website or offline by sending your documents and demand draft to CIBIL’s Mumbai office via mail.
Tip: Check Free Credit Score before applying for a loan
Also Read : CIBIL Score Check With PAN Card
The only difference between a CIBIL score and a credit score is that credit score can be provided by any of the four credit bureaus in India, but CIBIL score is provided only by TransUnion CIBIL.
A credit score in the range of 750 to 900 is the best score as it shows that the borrower has an exemplary credit history and it is easier for them to get a personal loan, home loan, credit cards and other forms of unsecured loans with such a credit score.
A CIBIL score of 600 is not considered good as it means that you have some irregularities with your previous credit repayments. Lenders may consider you a little risky to sanction a loan. However, a few banks may still consider you eligible for a loan, but you might be asked to provide a high collateral and can be charged a high interest rate.
650 is a fair CIBIL score. While it's not in the 'poor' range, it might not be considered high enough for some lenders, especially for unsecured loans like personal loans. Applicants with this score might face higher interest rates or more stringent terms.
Yes, 772 is considered a good CIBIL score. Scores above 750 are generally viewed favorably by lenders, increasing the likelihood of loan approval and obtaining favorable interest rates.
As per RBI mandate, every credit information bureau has to give one free credit report annually and Transunion CIBIL is no exception. However, if you want to check your CIBIL score more than once then you will have to pay around Rs 550 and you will get your report within 3 days of making the payment.
If you have ever wondered how credit bureaus in India calculate my credit score, here is the answer. Each credit bureau has its own algorithm to calculate credit scores. Credit score is calculated after considering certain factors, such as repayment history, credit utilisation, credit duration, and credit type.
Applicants should have a credit score of 650 or above to be eligible for SBI personal loans. An applicant with a high credit score has a better chance of getting a low rate of interest on loans and lower processing charges.