What is CIBIL Score?

It is a three-digit number, which ranges from 300 to 900 and signifies how financially worthy you as an individual are. Your credit health is determined by factors like credit history, frequency of loan applications, existing loan applications, rejections and timelines of loans, and past repayment track records, among others. A good CIBIL score is a score, which enables you to get loans easily, subject to your eligibility and at low-interest rates.

Importance of CIBIL Score

In India, almost all banks and non-banking financial companies (NBFCs) depend on the CIBIL score for loan approval and disbursal. Irrespective of how you have planned your finances, you may have to apply for loans at any time and that is when your CIBIL score would matter. The following are a few areas, which are influenced by your CIBIL score:

  • Credit approval: Banks and NBFCs refer to your CIBIL score to approve credits. Your credit applications have a higher chance of being approved when you have a high CIBIL score.
  • Rate of interest offered: Banks and NBFCs offer a low rate of interest to those individuals who have a high CIBIL score.
  • Types of credits: A wide range of Credit Card offers come to those who have a high credit score in comparison to those who have a low credit score.

What Does Your CIBIL Score Imply About Your Financial Health?

It is quite important to maintain a good CIBIL score, as it is an indicator of a person's financial health and how responsible they are when it comes to using money. A score of 700 or above is considered as a good CIBIL score in India. However, at the same time a higher score may be required for unsecured loans in comparison with secured loans.

Having a low CIBIL rating increases the chances of your loan application being rejected. Banks and big finance companies are very particular when it comes to CIBIL ratings as they offer a low rate of interest on loans. Having a low CIBIL score gives the lender the impression of you being high-risk which makes them unwilling to give you a loan. Smaller finance companies and NBFCs charge a high rate of interest on loans in order to compensate for the high risk that they will be taking by giving a loan to an individual with a low CIBIL score.

The CIBIL score now has a direct impact on your employment opportunities as well. Some employers use the credit history of the employee or the person applying for a job to do a background check on the person's discipline, maturity and their level of responsibility.

The following table will give you an insight into how CIBL score affects loan approvals:

CIBIL Score Impact


CIBIL Score between 750 and 900

Having a CIBIL score within this bracket means that you have a high chance of securing a loan quickly and without any hassle. A score within this range assures the lender of timely repayment of loans, which often leads to low rates of interest.


CIBIL Score between 700 and 749

Most people have credit scores belonging to this bracket and have a fair chance of getting a loan. While it is considered to be a good score, it does not mean that the borrower is as risk-free as the ones having a score of 750 or above.


CIBIL Score between 650 and 699

Though having a score in this range is considered to be average credit, the risk of loan rejection is quite high and the borrowers within this bracket need to work on their debt repayments. It is quite difficult to get favorable terms for loans with an average score. For secure loans like Home Loan, this range is fine.


CIBIL Score between 550 and 649

A credit score within this bracket means a high risk for the lenders and the chances of securing a loan are next to none. However, some lender may still offer loans as long as they can depend on a guarantor to reduce the risks. In order to improve their CIBIL scores, borrowers need to stop applying for loans till they repaid all their debts. Such a score indicates the borrower's financial instability.


CIBIL Score of 550 and below

A CIBIL score below 550 indicates poor credit health and the chances of loans getting rejected are very high. Any loan that is offered will have a high rate of interest and will only be accepted against collaterals such as shares, gold loans, FDs, and assets.

Factors Affecting Your CIBIL Score and Their Weightage

As mentioned earlier, your past repayment track record and credit behaviour affect your CIBIL score. This Information is submitted to CIBIL by your bank on a regular basis, which in due course of time is documented in your credit report and is used to calculate your credit score. Some factors that are used to calculate your CIBIL score are mentioned in the table below:

Parameters Weightage (approx.) Factors that Impact your Score


Past repayment track record



Timely loan payments, loan settled, over-dues and loan defaults.


Portfolio mix



Percentage share of secured and unsecured loans.


Credit utilisation



Credit limit utilisation, number of loans.


Other factors



Number of applications, number of loans.

Factors That Don't Affect Your CIBIL Score

Sometimes, we feel worried that a delay in any of our payments may get reported as a CIBIL default and result in the lowering of our CIBIL score. However, many of these delays are not reported to Credit Bureaus. Some factors that do not affect your score are:

  • Default/ delay in paying money to your suppliers/ trade partners
  • Utility bill payment track record including mobile and electricity
  • Any delay/ defaults in tax payments
  • Loan prepayment or transferring an existing loan to another bank
  • Checking your CIBIL score regularly
  • Payment track record of rent payments
  • Your spouse's CIBIL score
  • Cheque bounces in your bank account

Reasons for a Poor CIBIL Score

Usually, the CIBIL score shows your credit behaviour. However, sometimes incorrect reports submitted by banks may also result in a low credit score.

Low score due to past behavior:

Your repayment track record and credit behaviour may at times lead to a low credit score. Some of the common behavioral factors that lead to a low score are:

  • Delay in payment of EMIs on loan against property, home loan, consumer loan, personal loan, gold loan or any other.
  • Write-offs reported, especially in last 2-3 years on unsecured loans, secured loans and credit cards.
  • A higher proportion of unsecured loans in total loans outstanding
  • Outstanding credit card dues
  • High credit availed on credit cards
  • Too many loans already availed
  • Too many loan requests made in the recent past

Low score due to incorrect reports by banks:

Some of the common mistakes made by banks which may have an adverse effect on your CIBIL score are:

  • Lenders showing the amount as 'overdue' even when the customer has fulfilled the demand.
  • Wrong credit information provided by banks
  • Lenders classifying the account as 'settled with loss' while in reality the dues were disputed.
  • Records not updated even after the customer has paid their dues

Tips to Improve CIBIL Score

A low CIBIL score negatively affects your chances of getting a loan or credit card. In case you have a low credit score and would like to improve it, following are some tips on how to improve your score:

  • Opt for secured loans or credit cards:

    Even though a low CIBIL score lowers your chances of availing a loan or a credit card, it does not stop you from availing a secured loan or credit card against collateral. Timely repayment of secured loan or credit card paired with disciplined usage of the same would help you to increase your score.

  • Keep you CIBIL report free of any errors:

    You may have noticed that on many instances, even after you have repaid all your loans, your score is lower than what it should be. This happens due to system errors. In order to avoid such errors, make sure that you check your score on a regular basis, particularly after closing a card or a loan.

  • Avoid multiple credit card or loan applications in a short period of time:

    Making multiple applications for a loan or a card in a short span of time may give the impression that you are short of cash. Such an impression will ward off the lender especially if other banks have rejected your application. Make sure your loan or card applications are spaced out to avoid rejections.

  • Do not miss or delay your payments:

    Your repayment schedule toward credit card and loans makes up one-third of your CIBIL score. Therefore, a late payment will have an adverse effect on your score. Pay off all your bills on time to improve your score.

  • Do not go for a credit card or loan settlement:

    When you're unable to pay EMI on time, you then offer to close the debt for a mutually agreeable amount. However, this settlement would affect your CIBIL amount very badly. To avoid getting in a bad spot with your score, make delayed payments if necessary instead of opting for settlements.

  • Do not revolve your credit card balance:

    Whenever the credit card bill is due, make the full payment instead of the minimum amount. This improves your credibility to the lender.

  • Limit the utilization of your credit limit:

    In order to improve your CIBIL score, limit your utilization of your monthly credit limit to 50% of the total. Credit utilization of more than 50% signifies that you may not be in a position to keep aside some amount of money to pay off your debts due to financial issues. This leads to a drop in your credit score.

Comparing CIBIL with Other Types of Credit Reports

Apart from CIBIL, there are three other credit-reporting agencies that use the information provided by banks to prepare your credit report. The following table gives a comparison of the three agencies with CIBIL:



Years in India


Established in 2000


Received license in 2010


Received license in 2010


Received license in 2010












Free Credit Report


Annual credit report (without score)


Annual credit report (without credit score)


Annual credit report (without score)




Paid Credit Score


550 for one-time Credit Score




Score and report can be bought online for 399


399 for a report with score

FAQs - CIBIL Score

Does withdrawing cash against my credit card affect CIBIL score?

Yes, withdrawing cash against your credit card will have an adverse on your credit score. This happens because withdrawing cash against your credit card reflects poorly on your credit health and financial constraints.

Can repetition of loan EMIs be the cause of the sudden dip in my CIBIL score?

Yes, repetitions of transactions do have an adverse effect on your CIBIL score. You can get it rectified by raising a CIBIL dispute. Do make sure that this issue has been rectified before you apply for a loan or a credit card.

I often miss my loan repayments because I forget the due date. Is there any way in which I can stop my CIBIL score from getting affected because of this?

In order to solve this problem, you can give standing instructions to your bank to activate the auto-debit facility. This will deduct the outstanding amount from your account on a certain date, which will be decided by you as per your convenience.

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