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The Secret Formula Revealed: How Your CIBIL Score Is Calculated

Remember when we said to think of your CIBIL score as the marks you get on a test, only the grader is the CIBIL and the test is your creditworthiness?

Well, today we tell you something very important: how that score is calculated. Once you know this secret formula, you will know exactly which areas to focus on in order to improve and manage your CIBIL score!

Your CIBIL score is primarily calculated using 4 factors: payment history, credit utilization, credit mix and duration, and number of inquiries. Each of the 4 factors has a set weightage in the calculation of your final CIBIL score. Let’s get into the details now!

Payment History: 30%

This plays the largest role in determining your score, so make sure you pay back your loans and credit on time. Pro tip: set reminders for all payment due dates!

Credit Utilisation: 25%

Credit utilization is the amount of total available credit that you use. Experts recommend to use under 30% of your total credit limit to maintain a good CIBIL score.

Credit Mix and Duration: 25%

A healthy credit mix is a balance of secured and unsecured credit, showing lenders that you are good at managing all types of credit. Read more about secured and unsecured loans here! Lenders also like to see longer credit history. If you think you will take larger loans in the future, start building your credit profile now!

Number of Enquiries: 20%

Try not to apply for too many loans from multiple places. Each time a lender accesses your CIBIL report, it is noted down and lenders do not like to see an applicant that has applied for credit too many times.

These 4 steps will go a long way in improving your CIBIL score. For more tips on managing and improving your CIBIL score, click here!


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