The term ‘CIBIL score’, often used interchangeably with ‘credit score’, refers to a three-digit number ranging from 300 to 900. It is issued by Credit Information Bureau (India) Limited, one of the most trusted credit bureaus in India. This score is based on your credit history, including past loans, credit card repayments, and other borrowings.
If you're planning to apply for a personal loan, your CIBIL score plays a critical role. A score of 685 or higher is considered strong, increasing your chances of getting approved quickly, possibly with a higher loan amount and a lower interest rate.
CIBIL collects and analyses credit data from over 600 million individuals and has around 2,400 members, including banks, NBFCs, and other lending institutions. That’s why most personal loan providers rely heavily on your CIBIL score to assess your creditworthiness before sanctioning the loan.
What is the Range of the CIBIL Score?
The below table enlists what a particular CIBIL Score range signifies and, consequently, the probability of approval of personal loan:
Score band |
Category |
Personal loan significance |
Below 300 |
Poor Credit Score |
No credit history or minimal activity. Personal loan approval is highly unlikely. |
300–550 |
Very Low Credit Score |
Shows past credit issues. Very low chances of personal loan approval; focus on improving score. |
551–620 |
Low Credit Score |
Approval is difficult; interest rates may be high if approved. Credit improvement needed. |
621–700 |
Fair Credit Score |
May qualify for a personal loan, but not on the best terms. Consistent repayment can help. |
701–749 |
Good Credit Score |
Higher chances of personal loan approval with better terms and moderate interest rates. |
750–900 |
Excellent Credit Score |
Strongest profile for personal loans. Quick approval and access to higher loan amounts at low rates. |
What is your credit score?
Your credit score may be defined as a rating that reflects your creditworthiness. Think of your credit score as a batting average. If your batting average is above 50, then it means that you have a consistent scoring record of 50, and you are a good player. Similarly, when your credit score is high, it shows that you have borrowed and repaid credit responsibly in the past.
Why is a credit score important for Personal loan
Your credit score plays a key role in determining your personal loan eligibility. It directly affects the loan amount you may qualify for, the interest rate offered, and how quickly your application gets approved. Since personal loans are unsecured and don’t require collateral, your credit score becomes a major factor in evaluating how reliable you are with credit.
A strong credit score reflects responsible financial behaviour and increases your chances of getting a personal loan on favourable terms. On the other hand, a low score may result in a lower loan amount or higher interest rates.
While individuals are assigned personal credit scores, businesses also receive credit ratings. However, when you're applying for a personal loan, it's your individual credit history and score that matter most.
Background of credit score in India
The RBI has licensed four companies to access and manage credit information in India. CIBIL started its activities in 2001 and has since been one of the most popular credit information companies in the country. Others include Equifax, Experian, and High Mark. Each of these organisations has its unique scoring system.
However, one thing that is common between all scores is that if you have no credit history, your score will be -1. Likewise, if you have a credit history that is less than 6 months old, you will receive a credit rating of 0. Apart from this, these credit information companies also provide an in-depth credit report. Your credit report is the basis on which you are given a credit score.
Personal loan CIBIL score range
Your CIBIL score can range from 300 to 900, with 900 being the highest level of creditworthiness. For personal loans, a CIBIL score of 685 or above is considered ideal. It increases your chances of approval, helps you secure a higher loan amount, and may qualify you for a lower interest rate.
If your score is below 685, getting a personal loan becomes more difficult. You may get a smaller loan amount or charge a higher interest rate. In some cases, the application may be rejected altogether. That’s why maintaining a score above 685 is important when applying for a personal loan.
Personal loan eligibility based on CIBIL score
CIBIL score range |
Rating |
Impact on personal loan |
300–499 |
Poor |
Very low chances of approval. Consider improving your score before applying. |
500–649 |
Average |
Limited loan options: may face higher interest rates or require a guarantor. |
650–749 |
Good |
Decent chances of approval with standard terms. A higher score may unlock better offers. |
750–900 |
Excellent |
Strong approval chances with access to higher loan amounts and competitive interest rates. |
Features of RBI's new credit reporting rules
The Reserve Bank of India (RBI) has implemented new credit reporting rules to enhance the accuracy and timeliness of credit information. Key features of these rules include:
- Fortnightly reporting: Lenders are now required to report credit information to credit bureaus twice a month instead of once a month. This will provide a more up-to-date picture of borrowers' credit behaviour.
- Quicker updates: Credit scores will be updated more frequently, reflecting recent credit activity. This can positively impact credit scores for responsible borrowers who make timely payments.
- Potential fluctuations: Due to the increased frequency of updates, credit scores may experience short-term fluctuations. However, consistent responsible financial behaviour will lead to long-term benefits.
- Enhanced monitoring: Borrowers can monitor their credit health more closely by checking their credit reports regularly.
These changes aim to promote financial transparency and empower borrowers to make informed decisions.
Benefits of a Good CIBIL Score
A good CIBIL score increases your chances of loan approval with better interest rates and higher credit limits. It reflects responsible credit behaviour, making lenders more confident in offering you credit. Additionally, a strong score can lead to quicker approvals and access to premium financial products, helping you manage larger expenses with ease and financial flexibility.
How to read your CIBIL report or credit report?
The credit report is a detailed document that highlights your entire credit history and record. It includes your personal information, contact information, employment history, credit limit on various credit cards, credit balances, and dates on which you opened various accounts. Various parties or organisations view this credit report.
Some common parties who may view your credit report are as follows:
- Creditors
- Lenders like banks and non-banking financial companies
- Landlords
Given that it is a comprehensive document with multiple sections, it is important for you to know how to read your credit report. This will help you understand your report better and even check if it does justice to your credit history.
Important sections in your CIBIL report
Your CIBIL report holds the key to your financial health. Understanding its key sections empowers you to manage your credit wisely. Here, we delve into the four most crucial parts:
1. Credit summary
This section includes details on the kinds of credit accounts that you had in the past or have currently, along with the details regarding the balance. Usually, the account information is divided into segments such as revolving accounts like credit cards, instalment accounts like car loans, real estate accounts like home loans or loans against property, as well as any collection accounts.
2. Account history
This section consists of all details related to your credit accounts. It will include information like the lender’s name, the type and amount of credit you borrowed, the account number, the date the account was opened, the date you made your most recent payment, the current balance, and a monthly record (usually up to 3 years) of your repayment.
3. Profile information
This is a section that lists big financial slipups, both current and previous. This includes criminal arrests or bankruptcies. Pay special attention to this section and identify the causes of these errors and ensure that you don’t repeat them in the future.
4. Credit inquiries
Credit inquiries list the occasions where third parties have accessed your credit report within two years. Every time a lender checks your credit report, it is counted as an inquiry. Though you can view all credit inquiries, lenders or financial companies may be able to view only a small cross-section. Keep in mind that these inquiries are a result of credit card or loan applications that you have made. So, a potential lender may see multiple credit inquiries on your credit report and surmise that you have made many loan applications in the recent past.
How does CIBIL compute your credit score?
Your final CIBIL score is calculated based on several factors. These are:
- Your repayment history - contributes to 35% of the score
Your overall repayment history depends on how successfully you have managed to repay all your debt. Since the weightage given to repayment is so high, ensure that you make timely payments towards all your credit.
- Your credit balance and utilisation - contributes to 30% of the score
This section refers to the total credit available to you and how much you have already used. Your credit utilisation ratio is important and calculated as the outstanding balance on your loans or credit cards. If you have used most of your sanctioned credit, you will be considered a risky borrower. A good ratio is 30%, which means that you have used only 30% of your credit. - Your duration of availing of credit - contributes to up to 15% of the score
This refers to the repayment duration and timely repayment within this duration. If you have borrowed credit over a long repayment tenor and have responsibly and successfully repaid it, your score will be positively affected and vice versa. - Your new credit - contributes to up to 15% of the score
Every time you inquire about credit, your score is impacted. This may refer to loans you plan to take or credit cards you want to sign up for. If you have made too many credit inquiries, it makes you seem credit-hungry in the eyes of lenders and affects your score negatively. - Your credit mix - contributes to up to 10% of the score
It is always important to have a healthy mix of credit, which refers to secured and unsecured loans as well as short-term and long-term credit. So, if you have a home loan, a credit card, and a collateral-free personal loan, you will be deemed to have a healthy credit mix.
What is the difference between CIBIL, Equifax, Experian, and High Mark?
These are four credit information companies that function under the RBI’s approval. Their similarities and differences are listed below.
1. TransUnion CIBIL
- It is the oldest and most popular in India today. Also, it offers market insights and portfolio reviews for businesses apart from CIBIL scores and reports for individuals.
- Its scoring system ranges from 300 to 900, with 900 being the highest and 300 being the minimum CIBIL score.
- It offers businesses a company credit report and a CIBIL rank.
2. Equifax
- It was granted its license in 2010.
- Its scoring system is on a scale of 300 to 900, with 300 being the lowest and 900 being the highest.
- It also offers additional facilities like credit risk and fraud management, portfolio management, and industry diagnostics.
3. Experian
- It received its license for operation in India in 2010, but has been an international company since 2006.
- The Experian score ranges from 300 to 900, with 300 being the lowest and 900 being the highest.
- It offers several services for consumers and organisations, like customer acquisition, collection and money recovery, customer management, data analytics, customer targeting, and engagement.
4. High Mark
- It has been in operation since 2007; however, it received a license as a credit information company in 2010.
- Its score ranges from 300 to 900. While a score of 720 and above is considered good, 640 and below is deemed to be poor.
- It offers various services for customers, such as portfolio management, alerts, and geo-analytics consulting.
You can choose from any of these companies to calculate your credit score, and so can lenders and other parties.
How to check your CIBIL score steps by step?
If you are wondering where to check your CIBIL score, you can do it easily by visiting the credit information company's website. Usually, you will need to pay a small fee to check your score. Here is a step-by-step guide on how to check your CIBIL score:
- Choose a CIBIL-authorised partner: There are several authorised partners that offer CIBIL score checks. Research and select a reputable partner that aligns with your preferences.
- Register or login: Create an account or log in to the partner's platform using your personal details.
- Provide consent: Grant consent to the partner to access your CIBIL report. This is typically done through a digital agreement.
- Pay the fee: Most partners charge a nominal fee for accessing your CIBIL score. Choose a payment method that suits you.
- View your score: Once the payment is processed, your CIBIL score will be displayed. The report may also include details about your credit history, such as credit inquiries, loan accounts, and credit card accounts.
- Understand the components: Familiarise yourself with the components that contribute to your CIBIL score. These typically include payment history, credit utilisation, credit history length, credit mix, and credit inquiries.
- Analyse and take action: Review your score and identify areas for improvement. If you notice any discrepancies or negative factors, take steps to address them. This might involve paying off debts, reducing credit utilisation, or disputing errors in your credit report.
Check your CIBIL score for free
Financial companies and lenders also offer you to check your credit score. Apart from these financial companies, there are several other websites and applications that offers you to check free CIBIL Score at no extra cost. All you have to do is enter your details and access your credit score for free.
Why do lenders check your CIBIL score before approving your loan?
Since CIBIL score measures your overall creditworthiness, a lender is certain to check your score when reviewing your loan application for a variety of reasons. They are:
- To check your credit history and past record
- To see whether you are capable of repaying debts
- To review your credit balance and understand the risk level of your profile
- To judge whether you qualify for the loan
- To decide on the loan amount to offer you and interest rate applicable
What are the factors that affect your CIBIL score?
Given the significance of your CIBIL score, it is important to ensure that it's always towards the higher side. To do this, it is vital to be aware of the factors that affect your credit score and control them accordingly. Here are the factors that affect your CIBIL score:
- Your income
- Your existing debts
- Your past credit repayments
- Any defaults, delays, or lapses in previous credit repayment
- Rejections for loans that you have applied for
- Limited credit history can lead to a thin file or no credit score at all
- Failing to monitor your credit report for mistakes
How does outstanding debt affect your credit score?
The amount of outstanding debt impacts your credit score. Lenders normally check this in the form of the credit utilisation ratio. This refers to the amount of money you are using out of the total credit available to you. The higher the ratio, the lower your credit score. However, this doesn’t mean debt is bad for you. In fact, you will be able to build your credit score only when you take on debt. The key is to pay it off in a timely fashion and not go over your credit card’s or bank account’s limit.
Why outstanding debt spells bad news for your credit score?
1. It maximises your credit utilisation ratio
- A good credit utilisation ratio is 30% or lower
- A high ratio means you are using too much credit, which can reduce your credit score
2. It makes repayment of future loans difficult:
- If you have outstanding debts, it means that you could already be paying high EMIs
- Borrowing more loans in the future with outstanding debts can create a major repayment burden and even cause bankruptcy
What is a good credit score to avail of a personal loan?
The minimum CIBIL score for a personal loan is 700 or 750, depending on the lender. Having this CIBIL score for a personal loan can boost your chances of getting your personal loan application approved.
What is a good credit score to avail of a business loan?
An ideal CIBIL score for availing a business loan is 700 and above if you are opting for a collateral-free business loan
What is a good credit score to avail of a home loan?
To avail of a home loan you need to ensure that you have a CIBIL score of at least 650 or above. Since a housing loan is a secured loan, lenders have the option of seizing your home if you are unable to repay the loan. This is why a slightly lower credit score is allowed. However, it is in your best interest to maintain a good credit score so you can get a larger loan amount at nominal interest.
How to maintain a good CIBIL score?
You can maintain a good CIBIL score by following these simple steps:
- Pay your EMIs on time to create a proper track record
- Avoid having a credit card that you don’t use; cancel dormant credit cards
- Manage your credit cards carefully by setting payment reminders or limiting your use to one credit card
- Avoid re-applying for loans or credit cards that you did not get approved for in quick succession
- Don’t make too many loan applications in a short span of time
- Choose lengthy loan tenors with care and try to make part-prepayments when you can
How to get a loan despite a poor credit score
- Borrow from non-banks:
While non-banking financial companies, like Bajaj Finserv, still need you to have a decent credit score, they tend to have relatively simpler eligibility criteria, which may help you raise funds fast and without too much effort. - Apply with a guarantor or co-signer to your loan account:
Adding a co-borrower to your loan application helps distribute the responsibility of repayment between you and the co-borrower. When your co-borrower has a good score, you will be able to borrow a larger loan amount and boost your chances of approval too. - Try to find a secured loan:
When a loan is unsecured, the lender is more stringent with the eligibility criteria by carefully filtering and selecting the most reliable borrowers. However, if you have collateral to offer, the significance of having a good credit score diminishes. - Prove your financial backing:
If your credit score is poor, your lender will have limited faith in your ability to repay a new loan. So, you can submit evidence about your financial ability to repay the loan. You could show documents like your business’ profit and loss statement, bank balance, bank account statements, FD statements, rental income, etc., to prove to the lender that you have funds to repay the loan. - Take measures to improve your score:
There is no better tactic than simply boosting your credit score. You can do this by various methods, and the change would reflect in your score after a period of six months or a year. - Go for informal means of borrowing:
When you need money and have a bad credit score, try to raise credit from other sources like family or friends. You can then conveniently repay these loans as and when you have the funds.
