How CIBIL Score Is Calculated?

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While each credit information company has its own proprietary algorithm to calculate an individual’s credit score, the most important elements of the score composition are centric around the loan payment behavior of the individual. Your CIBIL TransUnion Score is calculated based on the information in the “Accounts” and “Enquiry” section of your CIBIL Report. The score is calculated based on the following factors – an overview:

Credit Utilization: How much credit is the consumer using?

Defaulting/Delinquency: How many accounts are past due and by how many days?

Trade Attributes: How old are this consumer’s lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?

CIBIL score is calculated based on the following factors:

The applicant’s repayment history:

The repayment history accounts to 35 percent of the score. Therefore you need to clear all your bills and loans well within the due date to maintain a good repayment history. If you default even once, it will negatively impact your score.

The credit balance:

The amount you owe to the lender accounts to 30 percent of the CIBIL score. There are two considerations with regard to this, the first being the total credit limit that is being sanctioned to you and the second being how much of the credit have you utilized. The credit utilization ratio is calculated as the balance that is outstanding on your credit cards and loans. If you have made most use of the credit, then your profile will be considered as ‘risky’.

Credit mix:

This accounts to another 10 percent of the CIBIL score. If you are avoiding credit like a plague and just opted for a single type of credit, it is not helping you have a good credit score. You need to have a mix of secured and unsecured loans. This means you must have a mix of the different types of credit that is mortgage, personal loan, car loan, credit card etc. Having the right mix will increase your credit score rather than having just one type of credit.

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.

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What creates a good CIBIL Score?

If your score is in the “good” range in the chart, you’ll generally be able to qualify for a mortgage loan with a competitive interest rate. The best rates are reserved for top-tier buyers, but the difference in interest rates between good and excellent credit scores may be less than you think.

https://www.omozing.com/2021/04/20/what-creates-a-good-cibil-score/

CIBIL Score Login process

The credit score is a three-digit numeric summary of your credit history, which is compiled from various financial institutions, lenders, and banks. The value ranges from 300-900, where 300 is the lowest score and 900 is the best score.

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CIBIL Score-Myths

CIBIL aims to bring in more transparency to the loan approval process in the country, in that customer now have an understanding of the seminal factors which lenders analyse to gauge creditworthiness. CIBIL reports, generated on a monthly basis (as mandated by the RBI), help lenders evaluate and approve or reject loan applications, as the case may be. However, there are several myths associated with CIBIL which need to be busted.

https://www.omozing.com/2021/04/20/cibil-score-myths/

All about CIBIL Score

If your score is in the “good” range in the chart, you’ll generally be able to qualify for a mortgage loan with a competitive interest rate. The best rates are reserved for top-tier buyers, but the difference in interest rates between good and excellent credit scores may be less than you think.

https://www.omozing.com/2021/04/20/all-about-cibil-score/

All about CIBIL Defaulter

Any individual who has ever been on the credit line gets a report automated in the credit bureau together with information on the repayment timings. When repayments are late or not made at all, it has a negative impact on your credit score.

https://www.omozing.com/2021/04/20/all-about-cibil-defaulter/

Bad Credit Score – Side effects

Consider your credit score as the financial scorecard that ranges from 300 to 900. The score is given based on your loan or credit card repayment track of at least 6 months to a year. Any score of 750 or above is considered a good one while a credit score below 600 is considered bad by lenders. 

https://www.omozing.com/2021/04/20/bad-credit-score-side-effects-3/

Top 10 FAQs about Credit Score – good to know in 2021

CIBIL is not authorized to make any changes to an individual’s report unless approved by a bank or financial institution. CIBIL can, therefore, only help facilitate the process.

https://www.omozing.com/2021/04/20/top-10-faqs-about-credit-score-good-to-know-in-2021/