Your CIBIL score is calculated based on various factors related to your credit history and behavior. These factors include:
• Payment history: This is the most important factor that impacts your CIBIL score. It reflects how regularly you have made your credit card and loan payments. Delayed payments or defaults can significantly lower your score.
• Credit utilization: This is the ratio of your credit card balance to your credit limit. A high credit utilization ratio can indicate that you are credit hungry and can lower your score.
• Length of credit history: The longer your credit history, the better your score is likely to be. This factor takes into account the age of your credit accounts and the duration of your credit relationships.
• Credit mix: A healthy mix of secured and unsecured loans, such as home loans, car loans, and personal loans, can boost your score.
• Credit inquiries: Every time you apply for a new loan or credit card, the lender makes an inquiry into your credit history. Multiple inquiries in a short period can lower your score.
• Settlements and write-offs: Settling your dues for a lower amount than the actual outstanding or having write-offs can lower your score.
• Other factors: Other factors such as the number of active credit accounts, frequency of transactions, and errors in credit reports can also affect your CIBIL score.
It is important to note that each of these factors is weighed differently in calculating your CIBIL score. Payment history and credit utilization have the highest weightage, while credit inquiries have the lowest weightage. By maintaining a good payment history, keeping your credit utilization low, and managing your credit accounts responsibly, you can improve your CIBIL score over time.
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