Understand How Your CIBIL Score is Calculated


A CIBIL score is a key parameter that lending institutions analyze while evaluating your loan application. Simply put, your CIBIL score gives an overview of your credit-worthiness. Your credit worthiness is directly related to your pattern of borrowing and repayment.

What is considered to be a good credit score?

Your credit score is evaluated on a range of 300 to 900, 300 being the lowest and 900, the highest. A score of 750 and above is generally considered to be a good credit score. On average, 79% of approved loans are for individuals whose credit score is above 750. A score ranging between 599 &700 is generally considered to be average.

It is imperative that one checks CIBIL score regularly. The Financial Health Check Report on Finserv MARKETS is a great option to conveniently keep track of your CIBIL score. It provides you an easy and accessible way to get a free evaluation of your financial stability and helps provides valuable insights that you can use to make informed financial decisions. Your free CIBIL report is personalised and completely simplified.

In order to effectively interpret your credit score and CIBIL report, you would first need to understand how your CIBIL score is calculated.

Factors Determining CIBIL score

Following are the key factors that are used to calculate the CIBIL score.

  • Credit History

Part of your credit score is directly dependent on your credit history. It comprises 30% of the factors contributing to your credit score evaluation. Financial institutions are required to collate all your past payments towards bills and EMIs (Equated Monthly Installments), and accordingly forward them to credit bureaus. The status of your loan account – whether it has been settled or written off – will also be reflected. Another important aspect to keep in mind is that your CIBIL report also reflects any delayed payments. If you have made late payments towards your EMIs or loans, this will negatively impact your credit score.

  • Credit Utilization

Credit utilization can be defined as the amount you owe the financial institutions that have lent you money as a percentage of your total loan amount. It comprises 25% of your credit score. Two entities play a role in determining your credit utilization i.e. your credit limit and the loan amount you have taken on that credit limit. After you divide the outstanding loan amount by your credit limit you will get the number representing your credit utilization percentage. If this percentile shows an upward trend with time, it is not viewed positively by the bureaus. The reason for that being that this is a representative of your loan burden increasing with time.

  • Credit Mix and Duration

Another important entity is the overall content of your loan portfolio i.e. how many secured loans and unsecured personal loan do you have. This factor comprises 25% of your CIBIL score. While secured loans would generally have collateral attached, unsecured would not. Examples of secured loans would be auto and home loans, whereas unsecured loans examples would be personal and credit card loans. It is generally recommended that borrowers maintain a healthy balance between secured and secured loans, without skewing too much towards either.

  • Number of Credit Inquiries

Every time you apply for credit from a particular lender, they would inquire about your credit score from the relevant credit bureau. Thus, your score would reflect the number of times you’ve applied for credit.  If you apply many times for loans within a short span of time, it can negatively affect your CIBIL score. The best way to resolve the situation is when you are applying for a particular loan, you need to ensure that you meet all the necessary requirements. This enhances the probability of your loan to be approved.

Methods to have a high CIBIL score

  • Pay your loan payments and credit cards on time.
  • Try to keep low balances i.e. use less credit available.
  • Try to balance a healthy combination of secured loans and unsecured loans.
  • Do not excessively apply for new credit.
  • Observe entities such as joint accounts as you are responsible for payments to be made on time along with your partner. Your partner’s negligence could affect your credit score if payments are not made on time.
  • Monitor and keep a check on your credit score frequently.


When you are looking to plan your financial future, consider your CIBIL score to be an essential part of it. If you continually check CIBIL score, you can ensure that it is above 750. The Financial Health Check Report can enable you to get a free CIBIL score as well as a comprehensive overview of your financial health. It takes into consideration multiple personal and financial parameters to give you a personalized summary of your financial health.

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