CIBIL score calculation

How is Your CIBIL Score Calculated - A Step-by-Step Guide

July 09, 2023 • 555 views
Author: PoonawallaFincorp Category: CIBIL Score

In a world where your expenses often exceed your income, loans can help alleviate your financial burdens. Be it for funding your education, purchasing a dream home, or dealing with emergencies, loans can offer you a lifeline. However, when you apply for a loan with a lending company, among the first things they check is your credit or CIBIL score. If you are wondering what it is and how is credit score calculated, we have listed all of them below in this step-by-step guide.

Basics of Your Credit Score

To put it simply, a credit score is a number that determines how likely you are to repay the loan you have borrowed. Speaking of how is credit score calculated in India, there are four major credit bureaus that calculate credit scores. They are TransUnion CIBIL, CRIF Highmark, Experian, and Equifax. While each of these credit bureaus has its statistical algorithms to determine individuals’ creditworthiness, they all look at your past credit history and financial behaviour which they compile into a report for the lenders.

A Brief Guide to CIBIL Score Calculation

The CIBIL score is the most popular marker of credit score in India. It is a three-digit number that is within the range of 300 and 900. If you have a higher CIBIL score, the lender will know that you are financially stable and you will most likely pay back the loan in time. A high CIBIL score makes you a low-risk borrower in the eyes of the lender. So, you have better chances of securing a loan, and that too at a comparatively lower rate of interest.
Below is a table that will help you understand the CIBIL score range and how it affects your creditworthiness and chance of loan approval:




Chances of Approval

Under 600

Very poor

Very low










750 and above


Very high


You can use a credit score calculator available on most lending companies’ websites to check where you stand when it comes to creditworthiness. However, keep in mind that having a high credit score does not automatically clear you for a loan. It just means that the likelihood of you getting a loan for a lower interest rate is high.

Factors on Which Your CIBIL Score Depends

The exact method used for CIBIL score calculation is quite complex and uses several factors. This method is proprietary information and is therefore not publicly available. While the specific details of the scoring calculations remain undisclosed, the credit bureau adds weightage to certain factors of your credit behaviour. TransUnion CIBIL then calculates your credit score based on how well you have performed in the below factors:



Credit History


Credit Exposure


Credit Mix


Other Factors



Let us look at each of these factors in detail:

Credit History

This is the factor that has the most significant impact on your credit score. With a high weightage of 30%, it looks into the number of payments you have made and whether you have done them on time. In case you delay your EMI payment, know that your credit score will be affected adversely as you will be perceived as being financially irresponsible. That is why you should be diligent with your loan repayments.
In case you are having trouble keeping track of all your loans, you can consider consolidating your debt. By consolidating your debt, you can combine multiple loans into a single loan with a lower interest rate or more manageable repayment terms. This can help simplify your payments and make it easier for you to stay on top of your financial obligations.

Credit Exposure

Credit exposure or credit utilisation ratio refers to the amount of credit you have used compared to the total available to you. Ideally, your credit utilisation ratio should be below 40% for a favourable CIBIL score. In case this number is higher, the lender may perceive you as a high-risk borrower and reject your loan application, further lowering your credit score.
You can avoid over-borrowing of funds and spend only within your means to maintain a healthy credit utilisation ratio. Also, you can keep checking your CIBIL score from time to time. If it is too low, you can make changes to your spending habits to get the score back on track.

Credit Mix

A credit mix means having a variety of credit accounts such as secured and unsecured loans, credit cards, etc. By managing multiple streams of credit responsibly, such as by paying bills on time and keeping utilisation low, you demonstrate good financial habits. When you also take on secured loans that typically have a long tenure spanning years, it shows your ability to handle long-term commitments.
Maintaining a mix of different types of credit accounts and responsibly managing them over time can lead to a positive credit history, improving your CIBIL score and increasing your chances of being approved for future credit applications.

Other Factors

This section comprises the number of active loans you have and the loan applications you have made. If your CIBIL report shows more than seven active loans, it shows the lender that you are heavily dependent on credit and thus a high-risk borrower. So they may be reluctant about giving you a loan.
Also, whenever you apply for a loan, the lender enquires your credit score. This is known as a ‘hard enquiry’ and hurts your CIBIL score. If you already have many active loans and keep applying for more, the chances of rejection get higher and further affect your CIBIL score. That is why it is recommended that you do not apply for multiple loans within a short period.

Also Read - What are the factors that can impact CIBIL score negatively?


Now you know how to calculate CIBIL scores and the factors affecting them. By taking these steps, you can improve your creditworthiness, increase your CIBIL score, and open doors to better financial opportunities in the future.

Frequently Asked Questions About CIBIL Score

  • Is my credit score calculated daily?

No. Typically, most banks and lending companies submit an individual's information to CIBIL every month. Using this data, CIBIL prepares a monthly report and score that assists lenders to determine individuals’ creditworthiness.

  • Is a score of 722 a good CIBIL Score?

Yes, a CIBIL score of 722 is considered good. It indicates a reasonably healthy credit history and increases the chances of loan approval.

  • Is a score of 650 a good CIBIL Score?

A CIBIL score of 650 is considered average. While it may not be considered excellent, it may still be an acceptable score for some lenders. 

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