ATM :: How is Your CIBIL Score Calculated?


Harshala Chandorkar | Updated On: June 21, 2015 17:28 (IST) | NDTV Profit

ATM

Today almost no loan or credit card application gets approved without checking the applicant’s CIBIL report and CIBIL TransUnion Score. Ever wondered how a person’s credit score is calculated? Here’s a quick glimpse into what goes into the making of a person’s CIBIL TransUnion Score:

What is a CIBIL TransUnion score?
CIBIL calculates an individual’s credit score through advanced analytics and assigns a number between 300 and 900 to a borrower, based on his/her credit history. The closer your score to 900, the more confidence the credit institution will have in your ability to repay the loan and hence, the better the chances of your application getting approved. While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a CIBIL TransUnion Score of 750 and above.

How is the score calculated?
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:

  • 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?

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.

Your CIBIL Report and CIBIL TransUnion Score not only determine whether or not you qualify for a loan, but it may also have an impact on the terms and conditions on which you can avail the loan. The higher the credit score, the better your chances of availing the loan faster and on favorable terms. It is advisable to check your CIBIL Report and CIBIL TransUnion Score before applying for a loan. Timely payments of loan EMIs is most important for maintaining a good credit history and a healthy credit score.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

Source : http://goo.gl/AaBxqj

Advertisements

One comment

  1. Rakesh

    it is really sad to see that global players like Experian and Mr. Mohan Jayaraman are sleeping and nor able to establish their foot steps against our CIBIL.
    Our Desi company rocks and Global Company like Experian is failing since last Eight years…. Despite they are global leaders.

Leave a Comment / Feedback / Say a good word!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s