How Is The CIBIL Score Calculated? 4 Important Factors You Should Know!


The credit score is an important measure that defines your financial health, and it can greatly impact your ability to secure credit or loans. The most widely accepted credit score is by CIBIL, or the Credit Information Bureau (India) Limited, also known as the CIBIL score. Understanding how to calculate the CIBIL score can help you analyze and also improve it if required. This article explores the 4 important factors that contribute to the CIBIL score calculation. Read on to find out more.

Calculation of the CIBIL Score: The 4 Important Factors

A credit score is denoted by a three-digit number ranging between 300-900. It represents your creditworthiness and comes in when you apply for a loan. The ideal score is considered to be anywhere near 750. The more your score is closer to 900, the higher your chances of getting your loan approved. 

However, there are a few critical factors that are responsible for the calculation of your CIBIL score. It is highly crucial to keep these factors in check to maintain an excellent credit score. Listed below are the 4 important factors that determine the calculation of credit scores. 

  • Credit Utilization

Credit utilization is the ratio of the amount you spend to the limit of credit available to you. High credit utilization is seen as unfavourable by credit bureaus because it shows an increasing debt burden for the individual; thus, negatively impacting your credit score. 

  • Credit History

One of the main factors that are used for CIBIL score calculation is your credit history. Many lenders give credit bureaus personal and credit-related data, which they assemble into your credit report and use to compute your credit score. The credit report contains information on your bill payments and EMIs during the last three years. It also displays the status of each account, whether it has been settled or written off, as well as the overall amount owed. It also shows details of any past dues, such as defaults or late payments on loans or credit cards, which can hurt your credit score.

  • Credit Mix 

The credit score will also depend upon your loan portfolio. It is always recommended to have a balance of secured, unsecured, short-term, and long-term loans to inculcate diversification. It holds significant weightage during CIBIL score calculation. A mix of different types of loans makes you a credible candidate with a well-rounded portfolio. 

  • Credit Duration 

To reach the ideal credit score, you need to have maintained a good credit history. If you have an extensive credit history or duration, it results in the lenders believing that you are good at managing your finances. Moreover, you should not close your old credit cards as it may hurt your CIBIL score. 


Your CIBIL score plays a crucial role in determining your creditworthiness and financial standing. By understanding and analyzing the four key factors that go into your CIBIL score calculation, you can take the necessary steps to maintain a good credit history and secure your desired loan terms and interest rates. Paying your bills and EMIs on time, maintaining a low credit utilization ratio, having a diversified credit portfolio, and establishing a lengthy credit history are all essential for a healthy credit score. By being mindful of these factors, you can make informed decisions and take control of your financial future.


Q1. How can I improve my credit score?

To improve your credit score, you should:

  • Check your credit report regularly 
  • Pay your bills on time
  • Keep a healthy credit mix 
  • Keep your credit utilization ratio low

Q2. What decreases a CIBIL score?

Different factors can negatively impact your CIBIL score. These can include delayed or missed payments, high credit utilization, multiple loan or credit card applications or inquiries, a short or no credit history, and mistakes, errors, or inaccuracies on the credit report.