What is CIBIL score?

Credit information company CIBIL has said the proportion of bad loans in the housing segment has more than halved in the past five years. The percentage of non-performing assets (NPAs) from the home loans segment has dropped to 0.57 in March 2015 compared to 1.06 at the end of 2010, a Cibil report said. The company attributed the lower delinquencies to availability of timely credit information for lending. It may be noted that 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: 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. 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.

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; Defaulting/Delinquency and Trade Attributes. The influencing factors include 1. Past Performance, 2. Credit Type & Duration, 3. Credit Exposure and 4. Other factors.

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.