What Are the Top 4 Factors That Impact Your CIBIL Score?

Updated: 15-08-2025 05:31:48 AM

Your credit score is the first thing that a lender will check when you apply for a loan or a credit card. Having a good credit score is the key to getting your loan request approved quickly. Your credit score is calculated after evaluating a number of factors. There are 4 major factors as explained below:

Top 4 Factors that contribute to Your Credit Score

1. Credit Repayment History

This shows how consistent you are in making timely payments. If you’re paying your instalments on time, your credit score is likely to boost up as this is the most important factor of your credit score.

2. Credit Utilization Ratio

It tells about your total credit limit and how much you’ve used till now, i.e. how much you owe. The less credit you use, the better your score will be.  It is advisable to maintain the credit utilization ratio below 30%. However, a high credit utilization ratio occasionally would not have a very serious impact on your credit score.

3. Errors in your CIBIL Report

Errors in your CIBIL Report such as an incorrect mention of default in repayments, errors in active loans/credit cards reported, etc. may adversely affect your CIBIL Score. Ideally, you should regularly check your credit report and raise a CIBIL dispute to rectify errors, if any, at the earliest.

Also Read: Why you Should Check your Credit Score regularly?

4. Credit Age

This is counted from the date of your first credit (credit card or loan) sanctioned. The older your credit age, the better it will be for your score.

A person having a credit account of 3 years old or more will be preferred over someone who is comparatively new in the credit market.

NOTE: You can also avail Paisabazaar’s ‘Credit Advisory Services’ which will help you to understand your credit report in detail.  In case you have no credit history, it will help you build your credit score from scratch. Through credit advisory, you will be able to understand the factors affecting the credit score better and will get perfect guidance in improving your credit score significantly over the course of time.

Additional Factors Contributing to your Credit Score

Hard and Soft Enquiries

When you apply for a loan or a credit card, the lender pulls your credit information from the available bureaus. This is called a hard enquiry or pull enquiry. If you’re making too many applications, your credit score may get pulled down. 

A soft enquiry is one where you check your credit score on platforms like Paisabazaar. Also, if you have a pre-approved loan or credit card offer and you enquire about that, it will be counted in your soft enquiries and will not impact your credit score negatively. 

Increase in Credit Limit

A credit card provider offers you an increase in your credit limit owing to your disciplined credit behaviour and other factors. It is advisable to accept such offers as it increases the available credit limit. It helps in keeping the credit utilization ratio at a lower level, thus, having a positive impact on your credit score. 

Opening New Credit Accounts Frequently

If you’re opening new credit accounts frequently, it shows that your existing accounts are not enough to fulfil your requirement which translates to a higher credit burden in future. This may bring your credit score down. 

Credit Mix

A good credit mix is one that contains at least one secured loan account with a long debt period (e.g. a home loan). Exposure to secured loans keeps you in a good light while a number of unsecured loan accounts shall only add to your disadvantage. 

Why is a Good Credit Score Important?

• Whenever you apply for a loan, your lender is going to request your credit score from credit bureaus. If your score is low, your chances of getting a loan will be low as well.
• Another benefit of a good credit score – better deals on credit cards and lower interest rates on loans. This is because a high credit score shows that you handle your credit responsibly and are less likely to miss payments.  

For More Benefits Read: Common benefits of High CIBIL Score