A good CIBIL score in India typically falls within the range of 750 to 900. Here is a breakdown of CIBIL score bands and their meanings:
| CIBIL Score Range | Meaning | Lender’s Perspective |
|---|
| 750–900 | Excellent | High creditworthiness; easy loan approvals |
| 700–749 | Good | Eligible for most loans with competitive rates |
| 650–699 | Average | Possible approval but with higher interest rates |
| 550–649 | Poor | High risk; limited loan options |
| Below 550 | Very Poor | Credit applications likely to be rejected |
Lenders generally prefer applicants with scores above 750, as it indicates responsible repayment behaviour and low credit risk.
Key factors that affect your CIBIL score
Understanding the factors that influence your CIBIL score is essential for improvement. Here is a detailed breakdown:
Payment history: Timely EMI and card payments
Your payment history accounts for 35% of your CIBIL score. Missing EMIs or credit card payments negatively impacts your score.
- Pay on time: Ensure all EMIs and credit card dues are paid by the due date.
- Set reminders: Use tools like auto-debit or calendar notifications to avoid missed payments.
- Avoid partial payments: Always pay the full amount due to maintain a positive credit history.
Credit utilisation ratio and how to manage it
The credit utilisation ratio measures the percentage of your credit limit that you use. A high ratio can lower your score.
- Keep utilisation below 30%: For example, if your credit limit is Rs. 1,00,000, aim to use less than Rs. 30,000.
- Request a higher limit: Increasing your credit limit can reduce your utilisation ratio.
- Pay off balances: Regularly clear outstanding credit card dues to maintain a low ratio.
Credit mix and account types: Secured, unsecured, credit cards, loans
A balanced mix of secured (e.g., home loans) and unsecured (e.g., personal loans) credit positively affects your score.
- Diversify credit: Use both secured and unsecured credit responsibly.
- Avoid over-reliance: Do not depend solely on one type of credit, such as unsecured loans.
Length of credit history and age of accounts
The age of your credit accounts contributes to 15% of your CIBIL score. Older accounts demonstrate a longer credit history, which is favourable.
- Maintain old accounts: Avoid closing long-standing credit cards or loans.
- Build history early: Start using credit responsibly at an early stage to establish a strong history.
Number of credit inquiries or recent credit applications
Frequent loan or credit card applications lead to hard inquiries, which can lower your score.
- Limit applications: Avoid applying for multiple credit products in a short period.
- Opt for pre-approved offers: These do not impact your score as they involve soft inquiries.
12 proven ways to improve your CIBIL score
Always pay dues and EMIs on time (and automate payments)
Timely payments are the cornerstone of a good credit score.
- Set auto-debits: Automate payments to avoid missing due dates.
- Prioritise high-interest debt: Clear high-interest loans first to reduce financial strain.
Keep credit utilisation below 30%
Maintaining a low credit utilisation ratio positively impacts your score.
- Example: If your credit limit is Rs. 2,00,000, aim to use less than Rs. 60,000.
- Tip: Pay off balances in full each month to keep utilisation low.
Avoid opening too many credit lines at once
Applying for multiple loans or credit cards within a short period can harm your score.
- Be selective: Only apply for credit when necessary.
- Use pre-approved offers: These minimise the impact on your score.
Maintain older accounts — do not close credit cards or loans carelessly
Closing old accounts can shorten your credit history.
- Keep old cards active: Use them occasionally to maintain a long credit history.
- Avoid closures: Unless the card has high fees, keep it open.
Build a healthy credit mix — use secured and unsecured credit responsibly
A balanced mix of credit types shows responsible borrowing behaviour.
- Diversify: Use credit cards, personal loans, and secured loans judiciously.
- Avoid over-borrowing: Do not take unnecessary loans to build a mix.
Clear outstanding debt before new borrowing
Outstanding debt can lower your score and reduce your borrowing capacity.
- Prioritise repayment: Clear dues before applying for new credit.
- Plan repayments: Use tools like the Bajaj Finserv EMI Network Card for hassle-free payments.
Use small long-term loans or credit cards to build history (if new borrower)
If you are new to credit, start small to build a positive history.
- Example: Take a small personal loan or use a credit card for regular expenses.
- Repay promptly: Ensure timely payments to establish a good record.
Regularly check and review your credit report for errors
Errors in your credit report can negatively affect your score.
- How to check: Use the Bajaj Finserv Service Portal to access your report.
- Dispute errors: Report inaccuracies to CIBIL for correction.
Use automated reminders or auto-debit for timely payments
Automation ensures you never miss a payment.
- Tools: Use apps like the Bajaj Finserv app to set reminders.
- Benefit: Avoid penalties and maintain a positive repayment history.
Maintain discipline — avoid financial missteps and reckless borrowing
Responsible borrowing habits are vital for long-term credit health.
- Avoid over-spending: Do not max out credit cards unnecessarily.
- Plan finances: Budget monthly expenses to stay within limits.
Typical timeline: When you can expect CIBIL score improvement
Improving your CIBIL score is a gradual process. While minor improvements can be seen in 3–6 months, significant changes may take 12–18 months. Consistent efforts like timely payments, low credit utilisation, and responsible borrowing are key to achieving long-term improvements.
