Understanding The CIBIL – What Is a CIBIL Score
April 1, 2019

The CIBIL Score is the rating given to individual on the basis of the performance of the various credit lines used by the customer; a good credit score will enable the applicant to get easily the credit facility applied for. It is important to keep abreast of the credit score, as in time of a financial requirement there are no surprises in store.

The salient features of a CIBIL Score are the following;


The Scoring Benchmark

The CIIL score is initiated from 300 points is a high risk category & goes up to 900 to a maximum, while closer to 900 is a low risk category.

A healthy credit score is anything above 725 points, most banks & NBFC’S consider a score above 725 points to be a minimum score to acquire easy credit, anything below may denote a late payment or a default.

A score of 650 points may be accepted for processing of a credit requirement of a loan or credit card if payment delays are not habitual & have happened due to an emergency or unavoidable circumstance.

  • 850 – 900 = Excellent
  • 750 – 850 = Good Score
  • 700 – 750 = Decent Score
  • 650 – 700 = Mediocre Score
  • Below 650 = Below average

Building your Credit Score

A minimum credit history of 6 months is required to merit a CIBIL Score it could be in the form of a consumer loan, credit card, Personal Loan, auto loan or home loan.

Consumers with a Credit history of less than 6 months are given a credit rating from1 to 5.Closer to1 being a high risk category & closer to 5 being a low risk category.

Consumers with no credit history & hence no CIBIL record are given are given a score of – 1 on an enquiry to CIBIL, which means the candidate has not yet initiated the use of any credit facility.

It is advisable for an individual to start building a credit score as soon as employed & earning, it could start by applying for a credit card usually Banks with which the salary account exists are liable to issue a credit card without a credit rating;

The age of the Credit history also contributes towards the CIBIL Score maintaining a credit card for a number of years with a regular payment recording or successfully completing the repayment of your Loan for the entire tenure will give a boost to your Credit score.


Steps to a good credit score

It is important to keep a watch on the credit score. Once a credit is taken it is important to keep a follow up & make sure that payments due are done on time, a casual or a careless attitude can prove dear. Using credit lines frequently, making payments on time & using a mix of Secure & unsecure credit are ways to boost your credit score.

Manoeuvres that impact a Credit Score

✔  Always honour the payment due date of your credit facility

Keep a strict check on the due date for the payment of your credit card dues or the EMI for your loan. Make it a routine check to make sure that there are enough funds in your salary account to clear the EMI on the scheduled date. If there is a lapse for some reason then make the payment as soon as possible.

A late payment within the 30 days bucket may not impact the credit score once in a while, but if payment is delayed regularly then it shows a habitual delay & the score will be affected.

✔  Use Credit Lines frequently

It is the usage of credit which builds a credit score. Banks are apprehensive to lend to applicants whose credit score is -1.The Loan amounts forwarded may also be conservative leading to un fulfillment of the required finance amount. No Lender will be keen to lend large amounts to an applicant without a proven track record.

Usage of a Credit card or Personal Loan payments with monthly transactions being reported to CIBIL will keep the account active & enhance the Credit Score.

✔  Do not apply indiscriminately for Credit

Applying for a Credit card or loan should be done after a survey of all the market offerings and identifying the right Lender which will best fulfils the financial requirements. Sometimes in an emergency for funds, an applicant could forward the loan application to a number of Lenders in a bid to acquire funds quickly or to make a choice for the terms & conditions offered.

This could create a negative impact on the CIBIL score of the applicant as every time a financial institution makes an enquiry to CIBIL to obtain a credit score, the CIBIL SCORE of the individual is reduced. A perfectly reasonable Credit Score of 750 basis points can come down as 10% of the credit score is dedicated to CIBIL inquiries.

✔  Maintain a healthy mix of Secure & Unsecure Credit

Taking an Auto loan for purchase of a car or motorbike or a Home Loan to purchase a new property are secure loans which help build a Credit score but simultaneously using a Credit card or a Personal Loan which are unsecure credit tools will boost your credit score tremendously.


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