Your credit score is a three-digit number given by CIBIL, which represents your credit history. And whenever you apply for a loan, the lender needs your CIBIL score to analyze all your debts and repayment history to check your credibility. 

A good CIBIL score indicates that your finances are in order and you have a good track record for all your previous borrowings. Further, it helps you to get approved for a loan at the best possible rates. However, a bad CIBIL score works vice-versa and can decrease your credibility.  

How is CIBIL Score Calculated?

Multiple factors build up your CIBIL score and based on the same your CIBIL score is calculated:

Your repayment history

Timely repayments for your previous and existing loans affect your credit score positively and will lead to a high credit score. On the other hand, delayed payments lower your credit score and can make availing of loans difficult in the future. 

Having a good repayment history always indicates that you were timely with your payments and this makes lenders trust you for your new borrowing. As a result the loan application with a good CIBIL score always gets approved. 

While, delayed payments also lead to late payment fees, penalties increasing the total amount to be paid. So, to avoid such consequences, you must repay the loan within the time and this will also help you to maintain a good CIBIL Score.

Multiple loan applications

When you are looking for a loan, applying for it several times with different lenders can lead to hard inquiries on your CIBIL. This can further impact your score. So, it’s always better to check for your CIBIL score before you apply for a loan. Doing this also helps you to know your eligibility and you can thus apply only with the lenders who fit into your eligibility criteria. This also reduces your loan rejection chances and will ensure loan approval.

Type of loan availed in the past

Availing multiple loans increases your debt to income ratio and when it is multiple unsecured loans, it is viewed negatively anyway. So, if you have applied for multiple loans within a short period or have multiple credit cards, then this can make you look credit hungry and lenders may hesitate to lend you in such a condition.


Write-off can affect your credit score on a huge level. Moreover, recent write-offs hurt your CIBIL more negatively as compared to older ones. 

To avoid such impacts, it is important to check your CIBIL score before applying for a loan. Doing this will also give you a fair idea as to whether or not your loan application will be approved.

How to Build CIBIL Score?

A person with no borrowing records has zero to negative CIBIL score, this is not considered good as lenders don’t have any record to rely on the applicant. So, if you have to avail of any loan in the near future, to eliminate the hassles you need to build a credit record for yourself. Steps to build a credit record:

Apply for a credit card

Applying for a credit card and using it can create a credit report on your name. But, before you go for this, you need to remember that credit cards have high-interest rate charges. And to maintain healthy finances you need to be timely with the credit card bill payments. 

Take a small amount personal loan

Taking a small amount of unsecured/personal loan will also help you to create a credit report for yourself. But to move your scores to a positive end you need to be timely with the repayments. Further, you can choose to close your loan account by going for a pre-payment as the interest rate charged for an unsecured loan is high. 

Apart from these, it is always important to check your credit score once in six months. Doing this will help you to rectify the errors and wrong reporting (if any) in your credit report. In case you find any you need to report it to the CIBIL or you can also write it to your lender.

Facts to Know About CIBIL Score!!
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Facts to Know About CIBIL Score!!
Your credit score is a three-digit number given by CIBIL, it holds great importance and plays a major role in deciding your credibility. To know more facts about CIBIL Score read on to this blog
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Finance Buddha
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