Major Factors That Affect Your CIBIL Score


Various Factors that Affetcs your Cibil Score

  1. Repayment History
  2. Debt Surveying Time Period
  3. Credit Limits Usage
  4. A High Percentage Of Credit Cards Or Personal Loans
  5. Credit Applications
  6. Loan Officer
  7. Debt Settlement
  8. Reducing The Number Of Credit Cards
  9. Not Using A Credit Card
  10. The Credit Report Is Not Checked

It is a big hassle for most people to get a loan and I think it’s a long and serious process. The whole process may take years and your debt may be before the end of years is finally accepted. Reasons for approval or rejection are a critical task for newcomers to this scene. Banks have become more and more difficult to apply for loan applications and a good CIBIL score may go a long way in getting that loan.

Your credit score is the most important factor in determining your interest rates and creditworthiness. The better your credit score, the less interest you will pay on loans and credit lines throughout your life. Having a good credit score can mean potentially hundreds of thousands of dollars in savings on interest payments throughout your life.

The problem is, the three major credit monitoring companies who determine your score (Equifax, Experian, TransUnion) arrive at that important number via an increasingly complex series of algorithms and other factors. If you can figure out exactly how the FICO score is determined, good for you. You are probably the smartest person in the world.

CIBIL products, especially the CIBIL TransUnion Score and the CIR are very important in the loan approval process. The credit score helps loan providers quickly determine, who they would like to evaluate further to provide credit. The CIBIL TransUnion Score ranges from 300 to 900. Our data indicates that loan providers prefer credit scores which are greater than 750.

Once the loan provider has decided which set of loan applicants to evaluate, it analyzes the CIR in order to determine the applicant’s eligibility. Eligibility basically means the applicant’s ability to take additional debt and repay additional outflows given their current commitments.

Post completion of these first 2 steps the loan provider will request for the applicant’s income proof and other relevant documents in order to finally sanction the loan.

What is Cibil?

Credit Information Bureau (India) Limited or CIBIL is commonly called India’s first credit information company. They have to collect and maintain payment records of individuals and businesses related to loans and credit cards. These records are used to create credit information report (CIR) and credit scores. Banks and lenders use these scores to assess and approve loans.

The CIBIL score serves as a gateway to determine how vital the person is on his / her payment to credit institutions. It is required to repay the loan based on the previous models of credit use and credit behaviour. The CIBIL score is 300 to 900. Credit close to the 900s indicates credibility and it is possible to get a more favourable response from credit institutions, but the score close to 300 indicates very little reliability, refusing.

A benchmark can be based on how the CIBIL score performs their credit.

A Cibil Score May Be Accepted Or Rejected By The Difference Between Your Loan Application. Here Are Some Key Elements That Affect Your Cibil Score.

Repayment History – If you have a timely payment history, it will reflect more on your CIBIL score. Clearing of all dates and liabilities clearing will expire on CIBIL score. Any unpaid payments or overdue payments reflect exactly on the score as you indicate that your responsibilities are difficult.

Credit Limits Usage – Credit Cards today provide high credit limits and if you are using this limit, it will reflect your CIBIL score correctly. Higher consumption of available credit limits indicates increased returns. Stick to the bottom of the limit, in this case, your score may be increased through the roof. It pays not to use too much credit in this case.

Debt Surveying Time Period – The time you used credit in calculating the CIBIL score is an important factor. It increases your score if you guarantee a lender for a long-term loan and a timely payment.

A High Percentage Of Credit Cards Or Personal Loans – a person with high-security loans (home loan/auto loan) have a positive score compared to people with more insecure loans. The most expensive form of an unsafe loan credit and higher interest rates are higher due to the higher payments, as the number of unsecured loans is higher. The person with more insecure loans has a lower score.

Credit Applications – People today apply credits cards thinking many loans and more credit means a better lifestyle. This appetite adversely affects the CIBIL score for more credit. Please be aware that credit companies are constantly applying for more credit or just a new loan granted. This behaviour indicates that the individual’s debt burden has increased and they have the opportunity to respect any additional debt.

Loan Officer – A person who works for a friend/relative liabilities can lose points on the CIBIL score. Failure to pay the applicant loan increases their responsibilities. Can not repay loans for a guarantee, CIBIL will significantly reduce the score.

Debt Settlement – There are cases where individuals can not afford the debt. This reflects poorly on the CIBIL score and it will get a loan after it is very rare. Banks are likely to reject the loan request from such individuals completely.

Credit Mix – A healthy combination of credit and debt will vary for managing credit. Without a credit, the person with a single debt has a poor score.

Reducing The Number Of Credit Cards – Reducing the number of credit cards can be expected to improve their CIBIL score, which is just the opposite. Revoking a credit card will reduce the total credit limit and increase credit use. Suppose you have 5 credit cards with a credit limit of 300,000 rupees and 50,000, and two of them surrender. This gives you a credit limit of 200,000 rupees. Your credit utilization ratio changes from 16.66% to 25%.
This has a negative impact on the CIBIL score.

Not Using A Credit Card – many people feel that using credit cards can result in high cost and bad credit habits. The credit card of the person in the credit bureau is inactive if it does not have any credit transactions or transactions. This reduces the CIBIL score of the person.

The Credit Report Is Not Checked – banks are likely to mislead the credit report. This ensures that the bugs are on record and that the CIBIL score may have a bearing. For example, the past delay may have a payment, which still shows in current reports. Without correction, it greatly affects the credit score.

Here is a breakup of the various factors that impact the CIBIL Transunion Score:

  1. Past Performance: Individuals past performance on their debt obligations is the most important criterion and contributes approximately 30 per cent weightage to the score
  2. Credit Type & Duration: Type of loan availed whether secured or unsecured loan, and the duration of credit history established contributes an additional 25 per cent to the score.
  3. Credit Exposure: The total amount of credit exposure contributes another 25 per cent
  4. Other factors: Other factors such as credit utilization, recent credit behavior contribute the remaining 20 per cent to the score.Your CIBIL Report and CIBIL TransUnion Score not only determine whether or not you qualify for a loan, but it may also have an impact on the terms and conditions on which you can avail the loan. The higher the credit score, the better your chances of availing the loan faster and on favorable terms. It is advisable to check your CIBIL Report and CIBIL TransUnion Score before applying for a loan. Timely payments of loan EMIs is most important for maintaining a good credit history and a healthy credit score.

Faqs on Credit Score Factors

Does an ECS bounce affect your credit score?

ECS is made to repay your loan instalments on time. Incase your account has insufficiet funds, then your ECS would not be processed. This the same thing as missing a loan repayments.

Needless to say, a default in payment will thrust your credit score downwards. However, if it is a “one-of” instance, the impact will not be too alarming, but if there are frequent ECS bounce cases or defaults/ delays in payments then it could serve a serious blow to your score.

To maintain a good score, make sure you make all your payments on time.

Does nonpayment of utility bills affect your CIBIL score?

As of now, how and when you pay your rent and utility bills (like electricity and phone bills) have no effect on your CIBIL score and credit report. So, if you default on your mobile postpaid bill, you can rest assured about your CIBIL score being steady and not going down.

Your credit or CIBIL score is influenced by those payments that are reported to a credit bureau namely CIBIL. Phone bills and rent payments are not reported and hence, timely or untimely payments made in this regard have no effect on your credit score.

Payments made to a bank or a Non-Banking Financial Company (NBFC) for a loan availed or any outstanding amount on your credit card bills that have been due for some time and which are yet to be paid will pull your CIBIL score down. These payments are reported by the member financial institutions to CIBIL which keeps a record of them. Being late in making these payments, missing them, paying them on time or in advance- all are recorded in your credit report and influence your credit score.

Can checking your credit score affects your Cibil Score?

The first step of any credit-related mission is getting your credit score. That poses the question — “Does checking my credit score affects my credit score?” The notion that checking your credit score affects your score is a common one, but it’s false. Checking your own credit score doesn’t affects your credit, but that doesn’t mean every inquiry is safe. Credit-damaging “hard” inquiries occur when you apply for credit and can impact your credit score, unlike the soft inquiries that occur when you check your credit score or credit report.

The fact that checking your credit score causes no harm is great news, since studies have shown checking your credit score often can improve your standing. In fact, a 2017 survey from Discover found 70% of people who conducted 12 or more personal credit checks in a year said doing so positively impacted their credit behavior. Even 64% of those who checked their credit score between seven and 11 times felt the same way. Conversely, only 31% of people who checked their credit once a year felt the same way. Those who checked their score 12 or more times were almost twice as likely to improve their credit than those who checked their score once. Even better? Those who checked their credit score the most were most likely to report improvements to their score. Those who checked their credit score most often were also more likely to report improvements to their score. Not only will checking your credit score not harm your credit, but also it can help you improve it. All improvements aside, let’s break down why routinely monitoring your credit won’t harm your credit scores.

How does an overdraft facility affect CIBIL score?

Using an overdraft facility won’t affect your CIBIL score but not being responsible with the facility by not making payments on time or overdrawing might hurt it your score. Making your payments on time will help you keep your credit score healthy.

In case you are unable to make payments on time, please contact your bank and discuss the issue. Unless you have agreed upon other terms with the bank in writing, they may at any time end or reduce your overdraft and demand which would lead to a massive drop in your credit score.

Does Opting For Emi For Credit Card Payment Affect Your Cibil Score?

Opting for credit card EMIs will not affect your CIBIL score, unless you miss/delay an EMI payment or fail to pay off your credit card dues. However, your EMI amount and the due date will reflect on your credit report if you even miss one payment. Missing a credit card payment can bring your credit score down. Converting your purchases into EMI makes it easier for you to manage your bills, and helps to maintain your CIBIL score if you consistently make payments, on time, every time.

If your CIBIL is affected due to the payment default, what will be the status in the future borrowing?

When you are not able to make payments against the outstanding loan/credit card amount for more than 180 days, the lender is required to "write-off" the amount in question. The lender then proceeds to report this on your CIBIL Report as "Written off". This is a detrimental status for the approval of your loan or credit card applications as the lender may not want to provide a loan or credit card to someone who has not paid dues on past loans or credit cards.

If the CIBIL Report shows a "settled" or "written off" status, then it may get difficult for the individual to obtain a loan. Understanding the elements of your credit history and then working on them to build a good CIBIL report and score will help make you "Finance ready".



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We have a dedicated staff devoted to assisting you with your future financial needs.
We provide advice and information on how to best manage your current credit to maximize the impact to your qualifying ability.



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