What is CIBIL Score?

CIBIL score is a 3-digit number (300-900) that represents your creditworthiness. It's calculated by Credit Information Bureau (India) Limited based on your credit history. Lenders use this score to decide whether to approve your loan application and at what interest rate.

A score of 750+ is considered excellent and gives you access to the best loan terms and lowest interest rates.

5 Factors That Affect Your CIBIL Score

1. Payment History (35%): Your track record of paying EMIs and bills on time. Even one missed payment can drop your score by 50-100 points.

2. Credit Utilization (25%): How much of your available credit you're using. Keep it below 30% for optimal score.

3. Credit Mix (20%): Having both secured (home, auto) and unsecured (personal loan, credit cards) loans shows better credit management.

4. Credit History Length (15%): Older accounts contribute positively. Don't close old credit cards.

5. Hard Inquiries (5%): Too many loan applications in short time can hurt your score.

How to Improve Your CIBIL Score

Short Term (1-3 months):
• Pay all outstanding dues immediately
• Reduce credit utilization below 30%
• Request credit limit increase
• Check and dispute errors in credit report

Medium Term (3-6 months):
• Make 100% on-time payments
• Keep old accounts open
• Avoid new credit applications
• Diversify your credit mix

Long Term (6-12 months):
• Build consistent payment history
• Reduce overall debt
• Let time improve credit age
• Maintain low utilization ratio

CIBIL Score and Loan Interest Rates

750-900 (Excellent): 6.5-8.5% interest rate - Save ₹2-3 lakhs on a ₹10 lakh loan

700-749 (Good): 8.5-10.5% interest rate

650-699 (Average): 10.5-12.5% interest rate

600-649 (Fair): 12.5-15% interest rate

Below 600: Limited options, very high rates or denial

Example: On a ₹10 lakh personal loan for 5 years, a 750+ score (8% rate) results in EMI of ₹20,276 while a 650 score (12% rate) results in EMI of ₹22,244 - that's ₹1.18 lakhs extra paid over the loan term!