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CIBIL Score - A Practical Guide

SSV

TF Reserve
Contributor
VIP Lounge
CIBIL Score - A Practical Guide

Discalimer: This is mainly for regular Credt Card users who pay all their dues before due date and wondering why their score is not increasing..
Here we dont discuss the cases where there were defaults and / or delayed payments..that is for another day..​

Ladies and Gentelmen,

Here is the much awaited post on CIBIL Score and how it works and what we should do to improve it over the period of the time..

Here I won't go in detail about how the score is constructed as there were numerous posts on the internet in explaining the CIBIL score in an academic way..
Here we will concentrate more on practical things..

Lets get started..

CIBIL Score's main constituents:

1) Payment History
2) Utilisation
3) Number of Enquiries in the recent past
4) Credit age..
5) Credit Mix

1) Payment History

We should pay all dues before the due date in order to have an excellent score and minimum fainancial burden on us.. This many of us do anyway..

TIP: we should atleast pay Minimum Amount Due( MAD) before the due date atleast - this will safeguard the score,
but will impact us financially if we pay only MAD and leave the rest...

Best practice:
1) Pay MAD immediately after the bill is generated - This will protect the score, in case you failed to pay the full before due date.
2) Pay the full amount due at least 5 days before due date. - ideal case scenario.
3) Pay the full amount even before the bill generations / month end- the best case scenario- will discuss this in detail at the end..

2) Utilisation

There is a notion that if we have <30% overall utilisation then it is good..
Lets dig deep into this..

The prinicple is : the higher the utilisation ratio, the lower the score.. and vice versa ...Period..
So, the aim should be the utilisation ratio should be as minimal as possible. ( it can even go into -ve, this is the best case scenario)..

How this works practically:
It works in range bound basis: like 0 to 10 % , 10 - 20 % and 20 - 30% etc.
Note: these exact range numbers are hypothitical.. trying to explain the logic...
For example: 0- 10% utilisation ratio will have better score than 10- 20% and
10- 20% utilisation ratio will have better score than 20- 30% ratio..

Once it crosses 30% utilisation ratio it will have big negative impact on the score.. hence need to maitain less than 30% ratio to have a decent score.

Tip:
This uitlisation ratio is calculated both on
1) overall basis ( on all accounts together) and
2) Individual account level basis..

Both of the above ratios will have their weightage in the score construction.

Example:
You have 10 accounts with a total of 10 Lakhs sanctioned limit and total utilisation of 2 Lakhs
Here the overall utilisation is: 20%, which is okay as it is under 30%..
But if one of the accounts has 50% utilisation ( ie, one account which has 1L limit and utilsation with 50K).
In this case , score will have big negative impact even though your overall is less than 30%...

BEST practice:

Make sure each and every account utilisation is less than 30% to start with
and as low as possible to have as better score as possible.. ( It can go to negative as well .. this is the best possible scenario)...

3) Number of Enquiries

This is where a lot of people have confusion..

The basic rule:
The longer the credit history , the lesser the impact of number of enquiries on the Credit score...

In practical terms:
Once your credit history crosses the age of 5 years, the no. of enquiries' negative impact diminishes..

Say if you have 6 years of credit history, then 5 or 10 enquireis in the past 1 to 3 months will not have any impact on the score.

If your credit history crosses 10 - 15 years , you can safely forget about the concept of number of enquiries...

TIP:
Even if your credit score is impacted because of no of enquiries, the score will recover pretty fast ie. within 2 to 3 months.
Only people with less than 5 years of credit history should be careful about the no of enquiries..


4) Credit age

The longer the Credit age the better the score and score's stability...
For a person who has a credit age of 15 to 20 years, the fluctuation in his/ her score is very minimal...

Again, after the age of 5 years , the score will get a bit of the boost and started to get stabilised..
Obviously the more older the credit profile the better.
when you are trying to close your oldest credit card account, please check what is the second oldest account's age, if it is more than 5 years, no need to worry..

TIP:
Check score predictor in the offical CIBIL app and predict your score by selecting the oldest card's closure.. this will give a very accurate prediction in my experience.

5) Credit Mix

Obviously, a mix of sceured and unsecured loans is a better indicator rather than having only unsecured loans...

However, what I observed in practice, except for Home loan all other Secured loans have no / minimal postive impact on the score..

Home Loan- will definitely improve your score by around 10 points.
Gold Loan and Loan against FD - have no positive impact on the score in my experience. in fact it had a negative impact as it is carrying some current balances..
Auto Loan - also may not have a positive impact..

Now coming to some other interesting bits:


SSV's Pro Tip:

1) Make current balances <=0 on each and every account as on Reporting Date ..


Maitain 0 or negative current balances on all accounts to get a boost of about 10 points to your score
Then you may ask what is the purpose of having 45 /50 days of free credit period..
Correct. this may not be useful for those who want to utilise full free credit days, but for those who want to boost their credit score for any other purposes temporarily this is one of the great tools which is in our hand..
I will also tell how to get this 0 utlisation along with availing free credit period to some extent for some bank credit cards..

We all know that different banks report balances on different dates.
We classify them as banks reporting balances as on
1) month end
2) bill generation date

The KEY here is current balances as on REPORTING Date ...
This Reproting date can be month end or bill generation date depending upon the bank.

1) For those that report balances as on month end ie.
AXIS, BOB, HDFC, HSBC, IndusInd, IDFC, Kotak, RBL , Stan C, YES ........
For these banks, make sure your due date falls on 1st of every month, so that means, your statement generation datee should be around 14th of every month so that bill DUE date is around 1st or 2nd of the following month...

In this case, you can have your full amount outstanding as on 14 th, but pay the full amount by 30th of every month..
So at the end, your current oustanding balances should <= 0 as on 30th.. this solves the issue.

2) For those banks who report on bill generation date, there is no escape: you have to pay just before bill generation date and make sure bill amount is <= 0,,,


2) HIGH Credit in CIBIL report:

There is one data item called " HIGH credit " in CIBIL report..
what it means : the highest amount used / billed in any credit account during the life time of that account...

This generally doesn't have any direct impact on the credit score except in the cases of charge cards like amex Gold, Platinum cards etc where there is no set sanctioned limit..
This was applicable until recentlty on HDFC cards as well, but HFDC now reports sanctioned limits to credit bureaus..

However, this data item potentially will be useful for lenders to know more about us with regard to
1) Potential high spender
2) giving better credit limits at the time of application..

I am not sure if the Indian lenders are incorporating this in their credit card application evaluation as of now.. I am sure in future they may use this..

How this should work:
Total amount used ie. debited duiring a staetment period should reprorted as HIGH Credit to the bureaus..

Scenario 1:
Take a case of what I generally do:

I have a card with sanctioned limit of 5L and I use it for 2L in one month and pay in full before the bill generation date.
This is how it will be reprted in this case:

Sanctioned Limit: 5L
High Limit : 2L
Current Balance : 0

This stat should WOW a potential lender towards me.. Why?
I am using 40% of sanctioned limit and paying in full back to account before the bill generation.
Means I am a high spender and very obedient in paying back before bill generation date..
and hence they should love to give me their card with generous limits..

Scenario 2:
Take another example of oppostie side:

Sacntioned limit: 5L
High limit :20K
current balance: 20K

In this case, Bank is wasting sanctioned limit on this person, as he is only using 4% of sacntioned limit ..
So , in this case this customer is not a high spender ( hence not much income to the Bank) and there is no point in giving him higher limits as well ..

As per my observation only SBI and Amex is reprortng this HIGH limit correctly in true sense.
(--EDIT: YES bank is also doing the same as per @reach2dpg )
ie.
same example:
spends of 2L , paying full before bill generation:
SBI and AMEX reported
as CL :5L
High Limit 2L and
Curre balance : 0

where as all other banks reported as
CL :5L
High Limit : 0 and
Curr Balance :0..

For other banks to report correct high limit ,we need to have full balance outstanindg as on bill generation date at least for one statement period....

Look at the example of my ICICI account

1721309965192.webp

In the above example, my highest bill oustanding duirng one statement period was 2.15 L out of 7.7L sanctioned amount ..and current balance is Zero..
Means I am a good boy. A high spender who pays bills before bill generation.. Banks would love persons like these...

So, with regard to HIGH limit:
My TIP:


Use your card just once for a very big amount and get it reported as HIGH limit , and from then on-wards use as per your normal usage...


This post became too big..but I wanted to share all my knowledge as far as CIBIL score is concerned..

All the best guys...

Have fun
Enjoy.....
 
Last edited:
Can anyone help me regarding this:
This loan account is shown on the credit profile (Both Experian and CIBIL) of my friend Mr. Ojha.
But he didn't take this loan from Aditya Birla Finance.
Is this account opened for any "pay later account" from any App?
Can anyone help me figure this out: Which kind of pay later/loan account is this? Screenshot_20240901-230624.webp
 
Can anyone help me regarding this:
This loan account is shown on the credit profile (Both Experian and CIBIL) of my friend Mr. Ojha.
But he didn't take this loan from Aditya Birla Finance.
Is this account opened for any "pay later account" from any App?
Can anyone help me figure this out: Which kind of pay later/loan account is this?View attachment 67052
Paytm pay later I think had link with Aditya Birla
 
This Axis Bank is screwing up my total assigned credit limit specially after Citibank merger.
Had 3 axis cards, SI and Privilege taken earlier to grab joining benefits and multi-brand vouchers.
After merger 2 more cards added to axis and limit added on all five cards and they are reported as separate account.
So total credit limit reported on 5 Axis card is more than 55 lac and this is not the ideal situation.
Need to close at least 3 of these Axis card asap.
 
CIBIL Score - A Practical Guide

Discalimer: This is mainly for regular Credt Card users who pay all their dues before due date and wondering why their score is not increasing..
Here we dont discuss the cases where there were defaults and / or delayed payments..that is for another day..​

Ladies and Gentelmen,

Here is the much awaited post on CIBIL Score and how it works and what we should do to improve it over the period of the time..

Here I won't go in detail about how the score is constructed as there were numerous posts on the internet in explaining the CIBIL score in an academic way..
Here we will concentrate more on practical things..

Lets get started..

CIBIL Score's main constituents:

1) Payment History
2) Utilisation
3) Number of Enquiries in the recent past
4) Credit age..
5) Credit Mix

1) Payment History

We should pay all dues before the due date in order to have an excellent score and minimum fainancial burden on us.. This many of us do anyway..

TIP: we should atleast pay Minimum Amount Due( MAD) before the due date atleast - this will safeguard the score,
but will impact us financially if we pay only MAD and leave the rest...

Best practice:
1) Pay MAD immediately after the bill is generated - This will protect the score, in case you failed to pay the full before due date.
2) Pay the full amount due at least 5 days before due date. - ideal case scenario.
3) Pay the full amount even before the bill generations / month end- the best case scenario- will discuss this in detail at the end..

2) Utilisation

There is a notion that if we have <30% overall utilisation then it is good..
Lets dig deep into this..

The prinicple is : the higher the utilisation ratio, the lower the score.. and vice versa ...Period..
So, the aim should be the utilisation ratio should be as minimal as possible. ( it can even go into -ve, this is the best case scenario)..

How this works practically:
It works in range bound basis: like 0 to 10 % , 10 - 20 % and 20 - 30% etc.
Note: these exact range numbers are hypothitical.. trying to explain the logic...
For example: 0- 10% utilisation ratio will have better score than 10- 20% and
10- 20% utilisation ratio will have better score than 20- 30% ratio..

Once it crosses 30% utilisation ratio it will have big negative impact on the score.. hence need to maitain less than 30% ratio to have a decent score.

Tip:
This uitlisation ratio is calculated both on
1) overall basis ( on all accounts together) and
2) Individual account level basis..

Both of the above ratios will have their weightage in the score construction.

Example:
You have 10 accounts with a total of 10 Lakhs sanctioned limit and total utilisation of 2 Lakhs
Here the overall utilisation is: 20%, which is okay as it is under 30%..
But if one of the accounts has 50% utilisation ( ie, one account which has 1L limit and utilsation with 50K).
In this case , score will have big negative impact even though your overall is less than 30%...

BEST practice:

Make sure each and every account utilisation is less than 30% to start with
and as low as possible to have as better score as possible.. ( It can go to negative as well .. this is the best possible scenario)...

3) Number of Enquiries

This is where a lot of people have confusion..

The basic rule:
The longer the credit history , the lesser the impact of number of enquiries on the Credit score...

In practical terms:
Once your credit history crosses the age of 5 years, the no. of enquiries' negative impact diminishes..

Say if you have 6 years of credit history, then 5 or 10 enquireis in the past 1 to 3 months will not have any impact on the score.

If your credit history crosses 10 - 15 years , you can safely forget about the concept of number of enquiries...

TIP:
Even if your credit score is impacted because of no of enquiries, the score will recover pretty fast ie. within 2 to 3 months.
Only people with less than 5 years of credit history should be careful about the no of enquiries..


4) Credit age

The longer the Credit age the better the score and score's stability...
For a person who has a credit age of 15 to 20 years, the fluctuation in his/ her score is very minimal...

Again, after the age of 5 years , the score will get a bit of the boost and started to get stabilised..
Obviously the more older the credit profile the better.
when you are trying to close your oldest credit card account, please check what is the second oldest account's age, if it is more than 5 years, no need to worry..

TIP:
Check score predictor in the offical CIBIL app and predict your score by selecting the oldest card's closure.. this will give a very accurate prediction in my experience.

5) Credit Mix

Obviously, a mix of sceured and unsecured loans is a better indicator rather than having only unsecured loans...

However, what I observed in practice, except for Home loan all other Secured loans have no / minimal postive impact on the score..

Home Loan- will definitely improve your score by around 10 points.
Gold Loan and Loan against FD - have no positive impact on the score in my experience. in fact it had a negative impact as it is carrying some current balances..
Auto Loan - also may not have a positive impact..

Now coming to some other interesting bits:


SSV's Pro Tip:

1) Make current balances <=0 on each and every account as on Reporting Date ..


Maitain 0 or negative current balances on all accounts to get a boost of about 10 points to your score
Then you may ask what is the purpose of having 45 /50 days of free credit period..
Correct. this may not be useful for those who want to utilise full free credit days, but for those who want to boost their credit score for any other purposes temporarily this is one of the great tools which is in our hand..
I will also tell how to get this 0 utlisation along with availing free credit period to some extent for some bank credit cards..

We all know that different banks report balances on different dates.
We classify them as banks reporting balances as on
1) month end
2) bill generation date

The KEY here is current balances as on REPORTING Date ...
This Reproting date can be month end or bill generation date depending upon the bank.

1) For those that report balances as on month end ie.
AXIS, BOB, HDFC, HSBC, IndusInd, IDFC, Kotak, RBL , Stan C, YES ........
For these banks, make sure your due date falls on 1st of every month, so that means, your statement generation datee should be around 14th of every month so that bill DUE date is around 1st or 2nd of the following month...

In this case, you can have your full amount outstanding as on 14 th, but pay the full amount by 30th of every month..
So at the end, your current oustanding balances should <= 0 as on 30th.. this solves the issue.

2) For those banks who report on bill generation date, there is no escape: you have to pay just before bill generation date and make sure bill amount is <= 0,,,


2) HIGH Credit in CIBIL report:

There is one data item called " HIGH credit " in CIBIL report..
what it means : the highest amount used / billed in any credit account during the life time of that account...

This generally doesn't have any direct impact on the credit score except in the cases of charge cards like amex Gold, Platinum cards etc where there is no set sanctioned limit..
This was applicable until recentlty on HDFC cards as well, but HFDC now reports sanctioned limits to credit bureaus..

However, this data item potentially will be useful for lenders to know more about us with regard to
1) Potential high spender
2) giving better credit limits at the time of application..

I am not sure if the Indian lenders are incorporating this in their credit card application evaluation as of now.. I am sure in future they may use this..

How this should work:
Total amount used ie. debited duiring a staetment period should reprorted as HIGH Credit to the bureaus..

Scenario 1:
Take a case of what I generally do:

I have a card with sanctioned limit of 5L and I use it for 2L in one month and pay in full before the bill generation date.
This is how it will be reprted in this case:

Sanctioned Limit: 5L
High Limit : 2L
Current Balance : 0

This stat should WOW a potential lender towards me.. Why?
I am using 40% of sanctioned limit and paying in full back to account before the bill generation.
Means I am a high spender and very obedient in paying back before bill generation date..
and hence they should love to give me their card with generous limits..

Scenario 2:
Take another example of oppostie side:

Sacntioned limit: 5L
High limit :20K
current balance: 20K

In this case, Bank is wasting sanctioned limit on this person, as he is only using 4% of sacntioned limit ..
So , in this case this customer is not a high spender ( hence not much income to the Bank) and there is no point in giving him higher limits as well ..

As per my observation only SBI and Amex is reprortng this HIGH limit correctly in true sense.
(--EDIT: YES bank is also doing the same as per @reach2dpg )
ie.
same example:
spends of 2L , paying full before bill generation:
SBI and AMEX reported
as CL :5L
High Limit 2L and
Curre balance : 0

where as all other banks reported as
CL :5L
High Limit : 0 and
Curr Balance :0..

For other banks to report correct high limit ,we need to have full balance outstanindg as on bill generation date at least for one statement period....

Look at the example of my ICICI account

View attachment 61596

In the above example, my highest bill oustanding duirng one statement period was 2.15 L out of 7.7L sanctioned amount ..and current balance is Zero..
Means I am a good boy. A high spender who pays bills before bill generation.. Banks would love persons like these...

So, with regard to HIGH limit:
My TIP:


Use your card just once for a very big amount and get it reported as HIGH limit , and from then on-wards use as per your normal usage...


This post became too big..but I wanted to share all my knowledge as far as CIBIL score is concerned..

All the best guys...

Have fun
Enjoy.....
Amazing post. I got to learn so many new things, especially that - ve balance before statement generation. I can see the hardwork that you've put into writing such exhaustive yet easy - to - understand post, and I truly appreciate it. Thanx for enriching us with it.
 
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Reactions: SSV
Amazing post. I got to learn so many new things, especially that - ve balance before statement generation. I can see the hardwork that you've put into writing such exhaustive yet easy - to - understand post, and I truly appreciate it. Thanx for enriching us with it.
Many many thanks for your true appreciation! !!

It was a very hard task to write such a post which had some years of observation amd yet to make it simple to understand...
Rhanks for recognising my effort...

Have a nice rest of the evening!!
 
AXIS CIBIL me month end ka report karta while Experian me statement generation ka.

Or it may be vice versa as I don't remember correctly.

But jo hai yahi hai 🤣🤣🤣.
All this going to change come Jan 1 , 2025 .. every one has to report twice a month
1)by 15th and
2) by month end..

all this stement date, month end, due date + 3 days drama will be over..
 
Hone do, jab hoga dekha jaega 🤣.

Maine CIBIL ka chinta chhod dia hai 🤣, bas card use karta hu.
Sahi kaha, Maine bhi CIBIL ki chinta chhod di,
Mera ICICI card 1.6 lakh use kiya tha 19July ko.
Mera bill generation date tha 18 August,
Maine 17 August ko Bill date change karke 16 September kar diya.
Ab bill clear karunga 2 October ko.
Approx , 75 days interest free period.

Uss, 1.6 L ko Indusind savings account mein daalkar 6% interest kama liya, approx 1972 rupees( Indus offer 6% interest on 5L-10L balance)
Aur bill payment karte time Indus Select debit card ka rewards bhi milega.
Aur haan, CIBIL score 788 se 779 mein drop hua tha, thoda sa high utilisation k liye, Lekin phir dhire dhire thik bhi ho jayega.
Aur mere liye CIBIL 788 aur 779 ek hi hai, jyada farak nahi padta. Lekin fayda bohut jabardasth hua.
 
Uss, 1.6 L ko Indusind savings account mein daalkar 6% interest kama liya, approx 1972 rupees( Indus offer 6% interest on 5L-10L balance)
Aur bill payment karte time Indus Select debit card ka rewards bhi milega.
Aur haan, CIBIL score 788 se 779 mein drop hua tha, thoda sa high utilisation k liye, Lekin phir dhire dhire thik bhi ho jayega.
Aur mere liye CIBIL 788 aur 779 ek hi hai, jyada farak nahi padta. Lekin fayda bohut jabardasth hua.
another option to consider..

1725349351900.webp
 
Sahi kaha, Maine bhi CIBIL ki chinta chhod di,
Mera ICICI card 1.6 lakh use kiya tha 19July ko.
Mera bill generation date tha 18 August,
Maine 17 August ko Bill date change karke 16 September kar diya.
Ab bill clear karunga 2 October ko.
Approx , 75 days interest free period.

Uss, 1.6 L ko Indusind savings account mein daalkar 6% interest kama liya, approx 1972 rupees( Indus offer 6% interest on 5L-10L balance)
Aur bill payment karte time Indus Select debit card ka rewards bhi milega.
Aur haan, CIBIL score 788 se 779 mein drop hua tha, thoda sa high utilisation k liye, Lekin phir dhire dhire thik bhi ho jayega.
Aur mere liye CIBIL 788 aur 779 ek hi hai, jyada farak nahi padta. Lekin fayda bohut jabardasth hua.

Mere trick ko serious le liye aap 🤣
 

Mere trick ko serious le liye aap 🤣
Ha, bhai. Le liya sahi mein 😜
 
I will consider it. But the nearest branch is 20km away from my residence.
Online account kholne se, debit freeze na ho jaye!
Correct ..
but I opened my account via online only when I got 0 mab offer via WhatsApp.
The trick here is don’t do upi transactions in this account.Then most likely it won’t be blocked.
 
Hi @SSV
I had an outstanding on one of my CC and rest CCs have negative outstanding.

I used CIBIL simulator to check what would be my projected score if there was no outstanding on any CC , it projected the score to be 802 which was increase of 11 points against 791.

However when today I refreshed my report , all the CCs now have negative balance ( also total) but score jumped only 1 point @ 792.

Views?
Each bank will report the data to CIBIL separately as per their process like during month end or after statement generation date. The change in CIBIL score may be delayed.

The simulator is showing me a 20 point jump to a >800 score if I don’t default in anything. Is it reliable?
Guys,
Here is my current Simulator predicoted score when I clear all my blances on all my Credit card accounts. from 784 to 794..
Remind me in 10 to 15 days, when my Infinia card balnce is reported as 0.. this score will make it to 794..
I will share the SS then.. Dont forget. thanks

From CIBIL Web site :

View attachment 62376


This is the only balance shoiwng some outstanding balance in +ve number.. I have already cleared it.. It will be updated in the first week of August.. remind me. then..

View attachment 62377


As promised, here is the SS of my latest score after each and every account was reported with 0 or <0 current balance,
the score is now jumped to 799 from previous 784 as shared about a month ago..
now HDFC bank account balance was cleared and reported as -Ve... along with all other cc acounts with 0 or -ve..

This is the proof.. and I dont want to explain this concept again and again..
Have fun...

Today's Screenshot ( as on 04/09/2024).

1725458593030.webp


Screenshot as on 25/07./2024 ..

1725458824593.webp


my last month's post as on 25/07/2024..

 
Last edited:
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