What is CIBIL score?

What is CIBIL score and How to Improve CIBIL Score?

Have you ever applied for credit cards or bank loans and heard that this will not be going to approved because of a low credit score?

Well, this is common now. You need to prove your financial health through a good CIBIL Score.

All the banks and financial institutions check your creditworthiness before sanctioning any loans to you. A good credit score proves you are financially sound and will pay back.

No bank will sanction loan to a person who is a defaulter and has a bad credit history.

So what is a CIBIL score and how does it prove your creditworthiness?
What if my CIBIL score is not good?
How can I improve my CIBIL score? If such questions are coming in your mind, you would find all of them answered here.
So let us start from a very basic question and that is,

What is CIBIL Score?

CIBIL Score or CIBIL TransUnion Score is provided by TransUnion CIBIL. TransUnion CIBIL is one of the credit information companies (CICs) of India. There are four CICs in India and TransUnion CIBIL is one of them.

The other three CICs are CRIF High Mark Credit Information Services Private Limited, Equifax Credit Information Services Private Limited, and Experian Credit Information Company of India Private Limited.
These CICs have been granted certifications to act as credit bureaus by RBI.

All these companies asses credit history of individuals and prepare a report which is called a credit information report (CIR). The CIR provides a score based on credit history.

However, all those companies basically do the same job, but TransUnion CIBIL is one of the most popular among them. If you know that CIBIL is the only company that provides your credit histories, there are 3 more such companies that do the same.

CIBIL score is a 3 digit number in the range of 300 to 900. The higher the score, the better it is.

According to TransUnion CIBIL, 79% of the loan or credit card applications are approved for individuals with CIBIL scores more than 750. So, if you’re applying for a new loan or credit card, you must have a CIBIL score 750+.

Why is CIBIL score required for sanctioning a loan or approving a credit card?

As already stated in the above paragraph, A CIBIL score is an outcome of credit information report that assigns a score based on the credit history of the individuals.
CIBIL score plays an important role in ascertaining your good or bad borrowing and repaying behavior.
When an individual applies for a loan or credit card, the bank or lender contacts credit information company and asks for CIR to check whether he or she has been regular in paying the dues.
A good credit repaying history comes with a good credit score.
A CIBIL score of 750+ is considered good.

How to maintain a good CIBIL score?

You can maintain a good CIBIL score simply by repaying all your outstanding dues on time.
You must never wait for the last day of your due date of loans or credit card bills.
Clear all your EMIs on time and maintain a good credit history. This simple and responsible behavior would help you getting approved all your loans in the future.

How to read a CIBIL Credit Report?

A CIBIL credit report is divided into sections of :
CIBIL TransUnion Score:

Where your score is provided based on your credit history.

Personal Information:

In this section, your name, DOB, Gender is recorded. This part also records your identifications like PAN, Aadhar card number, etc.

Contact Information:

This section records your official and permanent addresses, email ids, mobile nos, and landline nos, etc.
Employment information:

An individual is a salaried person or a business owner such information is shared here.

Account information:

This section of the CIBIL score is very important because it records all the information that is essential to check the credit history of the individual. In this section, the lending reports are shared.

This section also shows how many credit cards an individual has and how many loans he is serving. The information regarding payments of dues is also available here.

Inquiry Information:

This is the last section of the report that records inquiries an individual has made to different lenders regarding loans or credit cards.

All these sections represent the information of an individual. If you're reading your own credit report and you find some information that does not belong to you. You need to get it corrected.

How the CIBIL score is calculated?

However, there is no exact algorithm given about how the CIBIL score is calculated but it is mostly derived from borrowing and repaying habits of an individual.

If you look at the CIBIL report, you see account and inquiry sections where most of the credit-related information about an individual is compiled. 

How to Improve Your CIBIL score?

Now, we know that CIBIL score is a numeric presentation of one's credit history. If this is on a higher side, the individual is considered a responsible person who can pay off his debts on time. The CIBIL score of less than 650 is considered the worst score. The best CIBIL score is always above 800.
As per a report, only 4.7% of the new loans are sanctioned for CIBIL score of less than 650.
However, 57.6% of new loans were sanctioned for CIBIL score above 800. So maintaining a good score is very important if you're approaching a bank or FI for loans.

Here are parameters that could affect your CIBIL Score. 

Payment History: How punctual you're in repaying your outstanding debts. Are you defaulting on your EMIs?
Multiple loans and Credit Cards: If you have multiple loans and credit cards, The chances are you have a poor score because these products impose debt burden.
Increase in current balance on your credit cards: You're being overburdened by increased repayments  that may be a reason for a lower credit score.
Too much of the same products:
If you're having multiple personal loans it is not going to be favorable for a good credit score. A mix of multiple credits is good for a great CIBIl score. For example, having a personal loan and one auto loan is more favorable to a good CIBIL score than having two personal loans.

Here are a few tips that can help you with improving your score.

1. Never delay your dues,

Pay them on time. Develop a habit of paying dues before time or on time. Delaying dues payments are taken negatively which could seriously impact your score. Don't opt for EMIs on your credit card dues. You must always pay the complete outstanding amounts.

2. Don't own multiple credit cards or loans:

3. Use your credit cards in moderation:

 If your credit card limit is 50000 Rs. having an outstanding amount of 49000 Rs is not going to impress credit bureaus. Definitely, if you're repeating it more often your credit score is getting poorer.

4. Are you paying too many of EMIs:

If you have multiple EMIs running then it is not going to add any good thing to score. An individual with multiple EMIs running is already laden with a debt burden. Reduce your debt and become an individual with a good credit score. A good score is really going to short out many of your problems if you need a loan for an emergency.

5. Are you inquiring often to various lenders about mortgages or credit cards?

You need to control this behavior because all those things are recorded. If you’re filling up loan application forms or applying for a credit card often just to check how this all will go, you need to stop it now. This habit may ruin your score as well.

What if I have never taken any loan or credit card?

 If you have never taken any loan or credit card in the past, you may also find your CIBIL score in an average range or under NA or NH categories. The reason is you don't have enough borrowing and repaying history to assess your credit score. However, NA or NH categories do not have negative impressions to lenders but they are also not considered favorable either.

How to check CIBIL score: Free Online

If you’re going to apply for a new loan or credit card you need to check your credit score to confirm whether your application is going to be approved or not.
Here are 2 ways to get your CIBIL score without paying any fees.

Getting your credit score from CIBIL website.

1. Login to https://www.cibil.com/freecibilscore
2. Click on “GET YOURS NOW” tab
3. Fill the details in step 1 and click “Accept & Continue”
4. Verify the Identity in step 2
5. Once done click on “Member Login”
6. Fill the details and click “Enter”
7. A new screen is opened showing your CIBIL Score.

You can also check the detailed credit report and raise a dispute if you find information that does not belong to you.

How to check CIBIL score Free at SBI website.

1. Login to https://homeloans.sbi/getcibil
2. Fill all the details and click on “submit”
3. You would get an OTP on your mobile number.
4. In the next screen, you would be shown your CIBIL score.
You can also download your CIBIL report as a PDF file from a tab located bottom of the page.


CIBIL score is an important indicator of how responsible someone is in managing his finances. If it is not in a good range no lender is going to pay heed of you in lending you any money.
So keeping checking your CIBIL score periodically and always aim it to be 750+.

Have you checked your credit score? What is your score and what you have done to improve it? Please share your thoughts in comments below.