Consumers increasingly rely on credit cards and loans to help them realise their objectives and financial goals. The CIBIL Score is one of the key elements and metrics in obtaining this much-needed credit. 

A consumer’s credit score is represented by a CIBIL Score. Simply explained, this is a three-digit numeric summary of a consumer’s credit history that serves as a reflection of the person’s credit profile. This is based on prior credit behaviour, such as borrowing and repayment practises, as shared with CIBIL on a regular basis by banks and lenders (details of which are included in the consumer’s CIBIL Report). 

The Score is calculated using information from the CIBIL Report’s ‘Accounts’ and ‘Enquiries’ sections, which include (but are not limited to) loan accounts or credit cards, payment statuses, outstanding amounts, and days over the due date. 

With a range of 300 to 900, the closer a CIBIL Score is to 900, the more likely the consumer’s credit card or loan application will be granted. In fact, 79 percent of loans are sanctioned to consumers with a CIBIL score greater than 750. 

A person’s past conduct is used to predict his or her future actions, and the CIBIL Score demonstrates a consumer’s credit-worthiness. When a person applies for a credit card or a loan, one of the major elements that lenders consider is the person’s credit profile, as represented by the CIBIL Score. 

How is the CIBIL score calculated? 

There are few factors that impact CIBIL score: 

● Repayment history – contributes to 35% of the score . 

● Credit balance and utilisation – contributes to 30% of the score. 

● Duration of availing credit – contributes to up to 15% of the score. 

● New Credit – contributes to up to 15% of the score. 

● Credit mix – contributes to up to 10% of the score. 

CIBIL Report 

The CIBIL report is a crucial document for any lender to review before approving a loan application. The borrower’s CIBIL score, credit history, repayment history, biographical information, employment details, bank account details, contact information, and hard inquiry information are all included in the CIBIL report. 

Some common parties who may view the CIBIL report are as follows:

● Creditors 

● Lenders like banks and non-banking financial companies 

● Landlords

A lender evaluates whether the borrower is creditworthy or not by analysing the CIBIL report and developing the loan terms and conditions. 

TransUnion CIBIL, a credit bureau, generates a CIBIL report based on information provided by various lending institutions where you have taken out a loan, including credit card activities. TransUnion CIBIL receives data from lending institutions on a regular basis every 30-45 days. 

What are the factors that affect your CIBIL score? 

Given the importance of your CIBIL score, it is critical that it is always on the upper side. To accomplish this, it is critical to be aware of and control the elements that affect your credit score. Here are the factors that affect your CIBIL Score: 

● Income 

● Existing Debts 

● Past Credit Repayments 

● Any defaults, delays, or lapses in previous credit repayment. 

● Rejections for previous loans 

How to improve your CIBIL score? 

To get a personal loan, a home loan, or any other loan, you’ll need accurate CIBIL scores and a CIBIL report. As a result, in order to save your financial health, you must be constant and cautious in your approach. One can learn how to increase cibil score by being fiscally responsible – paying credit card bills on time, not missing loan EMIs, never defaulting on debts, and use credit prudently.