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Understanding my Cibil Score

Pawan Sharma is a 30 year old mid-level executive who lives with his parents in Lucknow. Unlike his father Mukul Sharma, who hates the idea of living on credit and has spent his life savings to build a retirement home, Pawan like most others of generation uses credit cards, has taken a car loan and is now preparing to take a home loan before he gets married in 2015.

Easy access to credit and the ability to repay debt in small amount through EMIs has made life a lot simpler for the likes of Pawan. But there is another side of the coin. If you are irresponsible with your debt you will end up having a poor Cibil credit score, which will in turn thwart your chances of getting a loan when you need one.

A CIBIL credit score represents an individual's financial stability, and helps lenders assess his or her financial credibility.CIBIL is India’s first credit information bureau. CIBIL is a repository of information of your repayment track record on your loans and credit cards.

Here is a chart to show what makes your CIBIL score:

Make-up of your score


What it means for you?

Payment history


The number of time you miss your payments has the highest influence on your credit score and can negatively impact your credit score.

Credit Utilization (Total of all credit card balances/ Total of all credit card limits)


CIBIL records how much of debt you utilize as compared to the upper limit that is set by the bank or credit card issuer. Higher utilization has a negative impact on the score.

Credit Age (Length of credit history)


The longer your credit history, the better it is for you. This means you are responsible with credit over the long term.

Credit Mix (The types of credit you use)

10 %

A healthy mix of credit unsecured loans such as personal loan and credit card and secured loans such as home loan and car loan have a positive impact on your CIBIL report.

Inquiries (The inquiries recorded on your credit report)


The banks pull out your report everytime you apply for any type of loan. Such inquiries form a footprint on your credit report. Too many inquiries demonstrate have a negative impact on your score and demonstrates credit hungry behavior.


A score of 700-750 on a scale that ranges from 300-900 is a good score. In today’s day and age all banks and credit card issuers pay utmost importance to your Cibil score.

For instance Pawan Sharma of Lucknow stands a pretty good chance of obtaining a home loan from a bank of his choice because he has handled his debt responsibly and has a CIBIL score of 765. Pawan has been able to maintain an excellent credit score because he ensures that he is never late with the EMI payments of his car loan and credit cards and for this he has set up an ECS facility from his bank account. He also uses his credit card very judiciously to pay for his utility bills.

If you want to maintain a good credit score like Pawan does, here is a quick list of Do’s and Don’ts for you to follow:

  • Do pay all loan EMIs and credit card bills on time.
  • Don’t overspend on your credit card.
  • Do maintain a healthy mix of credit.
  • Don’t think that a single type of credit ensures a good credit score.
  • Do apply for credit when it is necessary
  • Don’t come across as credit hungry as it is will impact your report negatively