What is CIBIL Score?

A CIBIL score is a 3-digit number that assesses your creditworthiness. It has a range from 300-900 and is calculated by the TransUnion CIBIL credit bureau after taking into consideration several factors. The best CIBIL score for a home loan is 750 and more. That said, a score of 700 and above is still good and should suffice for most lenders. The credit bureau then collates all the information into your credit report and calculate credit score. The credit bureau has a month-on-month record of the latest 3 years of your payments towards your bills and EMIs.

How to calculate CIBIL Score?

Your CIBIL score is made up of four factors and each of them have a weightage.

Payment History                                                         35%

Credit Exposure                                                          25%

Credit Type and Duration                                           20%

Other Factors                                                              20%

  1. Payment History

Payment history is a record of all your past and present payments made to your lenders. It includes all the data regarding your on-time, late, and missed payments. This helps the lender to gauge you as a borrower.

  1. Credit Exposure

Credit exposure is a measure of the maximum possible loss to a lender in the event that a borrower defaults on a loan.

  1. Credit Type and Duration

The 3 types of credit are: revolving, instalment, and open accounts. Duration measures just how sensitive the price is to a change in interest rates.

  1. Other Factors

Another factor that is a part of your CIBIL score calculation is hard inquiries. When you apply for credit such as a loan or a credit card, lenders pull out your CIBIL report from the credit bureau.