How is CIBIL Score Calculated?

Cibil Score Calculation


When you apply for any kind of loan the first thing that the lender will check is your CIBIL Transunion score. CIBIL stands for Credit Information Bureau India Limited. CIBIL Transunion score is a three digit number which ranges between 300 and 900. Closer the CIBIL score to 900, better it is. A credit score of over 750 is considered good score. Higher credit score increases your chances of getting loan. In case of unsecured loans such as personal loan you can even bargain for a lower interest rate, if you have a high credit score.

However, a good credit score doesn’t imply that your loan application will be accepted automatically. The lender will also consider your repayment capabilities before disbursing loan to you.


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Credit History

Credit score is calculated based on your credit history. It has the highest weightage of 30% in the calculation of your credit score. The banks and the financial institutions send personal as well as credit related information to the credit bureaus. The credit bureau then collates all the information into your credit report. The credit bureau has a month-on-month record of the latest 3 years of your payments towards your bills and EMIs.

The credit report will also have the status for each account whether it has been settled, written off and the total outstanding amount. It also carries about your days past dues details that is the details of the payments you have made. So, if you have ever defaulted or have delayed paying your equated monthly installment (EMI) on any of your loan or made late payment on your credit card, it will affect your credit score negatively.  

Credit Utilization

How much you owe to your lenders as a percentage of how much loan you can take is your credit utilization percentage. It has a weightage of 25% in calculating your credit score.  For calculating your credit utilization, you need two things—your credit limit and how much loan you have taken on it. Divide loan outstanding with your credit limit to get your credit utilization. Increasing credit utilization over time is seen negatively by the credit bureaus. It shows that the person’s loan burden is rising over time and gives a negative impression to the credit bureau.  

Credit Mix and Duration

Your CIBIL score will also depend on the composition of your loan portfolio that is how much secured loans and unsecured loans do you own?  It has a weightage of 25% in the calculation of your CIBIL score.


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Secured loans are auto loans and home loans which have collateral while personal loan and credit card loans are unsecured loans as they don’t not backed by any security. Any default and delayed payment made for any kind of loan will impact your credit score. However, higher weight of unsecured loan shows that lower will be your score compared to a person who has never taken an unsecured loan despite the fact both of you have made timely repayments. Secured loans have a very positive impact on your credit score if repaid on time.    

Other factors

There are other factors such as how many credit applications you have made in the recent past that account for the remaining 20%. It will be displayed under the Enquiry section in your credit report. Higher number of credit applications gives a negative impression to the credit bureau as it portrays the borrower as a credit hungry person.


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