CIBIL score calculation depends on your past credit behaviour and creditworthiness. The four major Credit Bureaus or Credit Information Companies (CICs) of India calculate and generate the credit scores of individuals by using their own and different statistical algorithm. Likewise, TransUnion CIBIL also calculates and manages the CIBIL score by using their unique statistical algorithm. There is no specific mathematical formula to calculate credit score and it varies from bureau to bureau. Credit score, also commonly known as CIBIL score is calculated on the basis of your credit history and is considered as the most important component of your credit report.
Factors on which CIBIL Score Calculation Depends
A good credit score doesn’t imply that your loan or credit card application will be surely get accepted. Lenders shall also consider a number of key factors before loan or credit card approval. Let us have a look at some of the most important factors on which CIBIL score calculation depends:
Credit score is calculated and generated based on your credit history. It has the highest weightage of 30% in your CIBIL score calculation. The financial institutions share consumer credit information to the credit bureaus on a monthly basis. The credit bureau then collates all the information into your credit report and calculate credit score. The credit bureau holds and maintains your month-on-month record of the latest 7 years of your payment history.
The credit report also contains the status for each account, whether it has been settled, written off, along with the total paid or overdue amount. It also contains information related to the Days Past Due (DPD), and details of submitted collateral/security, if any. Therefore, if you have ever missed, delayed or defaulted on your loan EMIs or credit card bills, it shall negatively impact your credit score.
Suggested Read: How Credit Card Impacts your Credit Score?