CIBIL score repair made easy!

Karan was looking to upgrade from his existing two-wheeler to a car and approached his bank for an auto loan. He was shocked to learn that his loan application was rejected on the grounds that his CIBIL score was low. Neither did Karan know much about his score, and nor was he aware as to why it was so low. Taking this as an opportunity, Karan analysed his spending behaviour pattern and religiously monitored his CIBIL score.

Does Karan’s situation sound unfortunately too close to home? Are you also looking at ways and means to better your own credit score? If yes, you’re in the right place – read on to know more!

In today’s financial environment, your credit score is akin to your passport to good credit when you require it. As in Karan’s case above, he was unable to obtain credit when he most required it, and hence when he eventually did get the loan it was at a higher cost and seeing that the price on the car also went up in the same period, he wound up spending more money than he would have otherwise.

What is a credit score?

A credit score is a three-digit representation of your creditworthiness, i.e. the likelihood of a borrower going to default on a loan. It is derived from your credit report which is a detailed analysis of your credit behaviour, both past and present.

When you approach a bank or other financial institution for a loan, the first check thye conduct prior to taking a decision as to whether to lend is to call for a copy of your credit report and go through your credit score. Typically ranging between 300 and 900 a higher score equals better chances of loan approval at the most competitive interest rates and other terms.

What then is the CIBIL score?

There are four credit information companies or credit bureaus licensed to operate in the country by India’s apex bank, the Reserve Bank of India (RBI), namely CIBIL, Equifax, Experian and CRIF High Mark. Of these CIBIL is the oldest bureau and hence very often, the term ‘CIBIL score’ is used interchangeably with ‘credit score’.

However, bureau reports and scores are both available across all four bureaus and if you wish, you can obtain a copy of your report from any or all of these bureaus. While the score itself may differ from one bureau to another, the analytics on which it is based is similar as all bureaus take into consideration the same factors when calculating the credit score.

What are the factors that impact the credit score?

A credit score is determined on the below mentioned parameters which are determined from your credit history:

  • Repayment track record or payment history
  • The amount you owe lender(s), or the outstanding due on your loans/ credit cards
  • Credit history
  • Credit mix, i.e. type of loans including secured loans (such as housing or auto loans) and unsecured loans (for example, personal loans or credit cards)
  • New credit, i.e. the number of times you apply for fresh loans or credit cards, which indicates your financial solvency and dependency on debt

What causes damage to the credit score?

Below are some of the factors that impact your credit score:

  • High credit utilisation ratio
  • Delay in bill or EMI payment, or skipping a payment altogether
  • Applying for multiple lines of credit, for example: several credit cards to enjoy the initial benefits on joining
  • Having no line of credit can also go against you, hence for instance, getting a credit card to establish good credit history is a prudent alternative

How does one repair the credit score?

The first thing to do would be to call for a copy of your credit report from any of the credit bureaus. With the process being online, it is simple and hassle free and your report (together with the score) will be made available you upon payment of a nominal fee. Once you have received the report, do go through it at length and check for any incorrect or inaccurate information therein. Every error in the report can cost you – you score can take an instant nosedive – and hence it is of utmost importance to ensure accuracy of information.

If you do have information that requires modification/ updating, do contact the concerned bureau at the earliest and request for it to be rectified. This will ensure that your score goes up, as your data is now maintained correctly.

Of course, the above does not apply in case you have unpaid loan EMIs or credit card payments against your credit report. In such instances, the only thing to do would be to make payments towards any outstanding debt and once cleared, request for the data to be updated with the newest information.

In addition to this, plan and budget your spends, and do not tack everything on to your credit card when out shopping. Further, do not utilise your credit card limit to the max, an ideal credit utilisation ratio across all your cards does not exceed 30 percent of the total card limit.

This will help you going forward as well, in making sure your card complements your lifestyle and does not entirely sustain it.

A credit health management company can also help, by assigning you a trained credit counsellor who will work with you to improve credit score over a period of time. While the task may seem challenging and uphill, it is not entirely impossible and with time, patience and financial discipline it is indeed something that is achievable. Credit Sudhaar, India’s premier credit health management company is one such organisation that you could approach.

The bottom line

A large part of your financial future depends upon your credit health so it is never too late to know more about your credit score and if it warrants attention, to do so before it is too late.


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