April 28, 2025 · 17 mins read
Santhosh Kumar
Ever applied for a loan and felt like the bank knew more about your financial habits than your mom? You're not alone. Somewhere in a sleek office, a banker typing in your name hits enter, and your credit score pops up as your report card did in school. And just like school, if your score isn't impressive, there's a good chance you'll be "politely rejected."
But wait, which credit score do banks use in India to judge you so quickly? Is it some secret number known only to banking elites? Is there one score to rule them all, or are multiple lurking in the shadows, waiting to bless or block your next EMI dream?
In this blog, we’re pulling back the curtain. We’ll dive into the world of credit bureaus, break down why one name—TransUnion CIBIL—keeps popping up like a trend on Instagram, and help you understand how banks really size up your financial reputation.
It provides a standard for everything possible-an attempt that the Indian banking system has made towards making credit scores one of the important consideration parameters for financial institutions to decide whether or not to grant individuals credit.
This has become part of any credit application, personal loan, home loan, or even a credit card. A particular credit score remains a long-distance measure in the bank's measuring risk in lending money as it acts mainly as a summary of a person's credit and financial behavior and gives the banks entry into as quick and reliable insight as possible into their repayment habits.
This score, typically ranging from 300 to 900, is determined by credit bureaus based on:
Payment history
Credit utilization
Debt due
Length and type of credit histories
Recent inquiries made concerning credit
The higher a score signifies responsible credit behavior and is thus improbable to deny a loan request; the opposite is true for a low score, which usually means a greater possible risk and thus a higher interest rate loan or rejection of a loan request.
Banks can create systems of discipline in finance to offer credit. They allow them to:
Facilitate more informed, data-driven decisions.
Reduce the potential for defaults and bad loans.
Simplify the credit approval process.
Assign appropriate interest rates against lenders based on borrower profiles.
Importantly, credit scores are becoming more essential as the digitization of banking continues to cut through all borders, whether geographical or otherwise, and financial inclusion is indispensable in this current world.
Lenders now prefer to rely on data-backed evaluations rather than judgments. A credit score provides precisely what they want: a standardized, unbiased, and comprehensive overview of the borrower.
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TransUnion CIBIL, formerly known as CIBIL (Credit Information Bureau (India) Limited), is India’s premier credit information company. It keeps thorough records of the credit-related activities of individuals and commercial entities, including loans and credit cards, as reported to it by banks and financial institutions.
Established in 2000, CIBIL later became affiliated with the global credit giant TransUnion. CIBIL brings credit data collection and analysis to the core of India's financial ecosystem. The company generates credit reports and credit scores from such data, which lenders use to assess borrowers' creditworthiness.
To put it concisely, your CIBIL score is not just an arbitrary figure but a result of a person's cumulative behavior, financial habits, and credit choices over time. This three-digit score varies from 300 to 900, and it reflects your borrowing and repayment behavior in a trustworthy way.
This score is generated in India by TransUnion CIBIL and has become a huge conduit for deciding whether or not the loan applied for every credit card makes it through.
Banks, NBFCs, and digital lenders closely analyze this score while judging your creditworthiness-especially in answering the question, which credit score do banks use in India to make lending decisions.
Here are the essential determinants that influence the calculation of your CIBIL score:
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This is the determinant that has the greatest bearing on the entire scoring formula. Indicate whether you have always paid your EMIs or credit card bills on time. Even one missed or too-late payment will reflect badly. Lenders prefer borrowers who exhibit the same trend in making repayments.
This is defined as the proportion of extant available credit you currently utilize. It would be deduced that you are under some kind of stress (for example, a maxed-out credit card) if you use much of your available credit. Ideally, usage levels should be kept below 30% of your limit in total.
Secured (like home or car loans) and unsecured credits (personal loans or credit cards) are shown with a proper mix, which in turn reflects your responsibility to various types of debt handling. Heavy dependence on unsecured credit may lead to risks viewed by lenders.
In the event of asking for a new loan or credit card, a lender usually does a "hard inquiry" to a credit report. Frequent such inquiries within short periods may show credit-hungry actions and pile up upon your score.
Thus, the five factors mentioned above go into assigning your score between 300 and 900. Here is a brief explanation of the ranges for scores:
750-900: Excellent - More likely to get approved, even at the better interest rates
700-749: Good - Fair chances of approval, possibly with standard rates
650-699: Fair - Can possibly get those loans but under stricter terms
600-649: Poor - Higher risk; loans likely to be denied within this range
Less than 600: Very Poor - The approval chances go remarkably low
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The CIBIL score is relied upon by almost all major banks and financial institutions in India for assessing an individual's eligibility for a loan. Your credit score is the financial picture that lenders would look at to determine your worthiness as a borrower. This score is virtually always checked first whenever you apply for any type of credit, be it a personal loan, home loan, car loan, or credit card.
So, whenever you wonder which credit score banks use in India, the answer is often the CIBIL score issued by TransUnion CIBIL. It is by far the most accepted and referred score across public and private sector banks.
Here are some of the banks in India that lend credit based on CIBIL score:
SBI, the largest public sector bank in India, evaluates loan applicants using the CIBIL score. Lower scores usually have longer approval times and higher interest rates.
HDFC mostly relies on credit reports from TransUnion CIBIL. Your CIBIL score is a prime factor in the approval process for any loan application, be it for personal loans or credit cards.
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This private giant bank employs a CIBIL score in evaluating the creditworthiness of applicants with approval of loans. A healthy credit score of 750 and above gives more chances for loan approval.
Axis Bank considers the CIBIL score as one of the primary eligibility criteria for retail loans, including personal loans, education loans, and home loans, for both salaried and self-employed applicants.
PNB uses the CIBIL score, just like any other public sector bank, for its verification process. Hence, the higher the score, the less documentation a borrower needs to access funds.
Kotak primarily uses CIBIL data to pre-approve offers to eligible customers and assess new credit applications. Borrowers with CIBIL scores of 750 and above stand a greater chance of getting better loan terms.
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The bank lays significant weightage on the CIBIL score in approving loans, especially for housing and automobile loans. A low score can basically block your loan application or attract an additional list of documentation.
IndusInd uses CIBIL scores to decide loan eligibility and sanction amount. Your score will similarly impact the interest rate charged.
Popular for digital and online lending, IDFC FIRST Bank depends on CIBIL scores for fast online loan approvals. The entire loan proposition hinges on creditworthiness, as evaluated by your report.
Yes Bank continually scrutinizes CIBIL reports to assess its lending decisions for both secured and unsecured loans. Individuals with low interest rates often relish gratuitous offers.
The effect of your CIBIL score changes from one loan type to another; generally, it depends on the nature of the loan- whether it is secured or unsecured, short-term or long-term.
Let's discuss how your CIBIL score affects specific loans in India:
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Personal loans, meaning most of them are unsecured and do not have any collateral. Therefore, CIBIL is highly relied upon by lenders.
Impact of CIBIL Score
Score greater than 750: would have a higher chance of approval, shorter processing time, and lower interest rates.
Score below 700: it would be considered high risk, and the banks might decline your application or offer you a loan at higher interest rates.
Score less than 600: you will be denied unless you have a guarantor or some financial backing.
Home loans are secured loans compared to the banks and the value of the property being acquired; nonetheless, your credit score remains a substantial determinant of your loan amount and its interest rate.
Impact of CIBIL Score
Score greater than 750: Better terms offered such as lower EMIs as well as a higher loan-to-value (LTV) ratio.
Score between 650-749: Loan approval possible but subject to normal or slightly higher interest.
A score below 650: either reject the application or demand a higher down payment.
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Car loans are secured loans. However, since they are relatively low when compared to home loans, banks also check your CIBIL score with your income.
A score above 700: Generally easy approval with lower interest rates.
A score between 600-699: Possible approval, yet interest will be higher.
A score below 600: May require either a co-applicant or payment regarding down payment requirements.
Education loans are generally taken by students in most cases, where the parents are co-applicants. For this kind of loan, banks usually consider the co-applicant's credit score.
A good score (700+): Easier approval; may qualify for government interest subsidies.
Average score (600 to 699): Has the chance of approval but slightly higher interest rates.
Low score (below 600): The Bank might refuse the loan or may require additional collateral.
Everyone's aware that CIBIL scores primarily determine whether a loan is issued or not. A lower score would not only mean a denial of the loan but also different interest rates, differences in the sanctioned amount, and long delays in processing an application.
A higher score translates to more flexibility in financing with better deals, while a lower score carries less flexibility and could cost the borrower more in the long run.
So, whether you are thinking about a house, a car, or just some extra cash, taking care of your credit score is just going to help you seal up the most in all sectors of loans above.
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Your online check for free on the CIBIL score is one of the crucial steps in keeping your financial health in check. Here is the detail in points:
1: Go to the official TransUnion CIBIL website: https://www.cibil.com.
2: Look for the option on the homepage to get your free CIBIL score.
The following details need to be provided:
1: Name (PAN card holder in that name)
2: Date of birth
3: E-mail Id
4: Mobile number
5: PAN card number
6: Password
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1: You will receive an OTP (one-time password) on your registered mobile number or e-mail.
Details such as the following might share even more information:
1: Your residential address
2: Employment details
3: Monthly income
4: Current loans or credit cards
This helps Match your credit report accurately with CIBIL.
1: Once the verification is completed successfully, the dashboard will open for you.
2: You can view CIBIL scores (which are usually a number between 300-900)
Apart from the score, you can look at a summary of your credit report, specifically your credit history and your debts and payments.
Should there be any concerns, inaccuracies, or issues, one can raise a dispute with CIBIL.
1: You can check the score once a year with the help of this free service.
2: If you want to check it more frequently, you could subscribe for a paid plan, which will keep you updated.
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Spot Errors Early: Checking your score allows for the identifying and correction of errors in your credit report before it affects loan applications.
The CIBIL score indicates which loans you may qualify for: Your CIBIL score directly affects eligibility for loans, and so knowing that score will give you an idea of what types you could be eligible for.
Track Your Financial Health: Checking your score regularly gives you insight into your financial habits that can help you spot areas to improve, such as paying down credit card debts or being more timely with payments.
Your CIBIL score is one of the most important determinants for getting approval for loans or credit cards in India. Sadly so many people still believe in myths and erroneous notions regarding the working of credit scores.
Here are some of the more common myths that you need to cast away from your belief system:
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Many think that checking their own credit score will affect it. To put it right, while you check your score for yourself, it's a soft inquiry, which usually has no bearing on the score itself. It's only the hard inquiries, lent out by banker-lenders when you apply for credit, that can affect your score.
High income may show the ability to repay loans, but it will not feature in the calculation of your credit score. In fact, CIBIL gives more importance to your repayment history, credit utilization, and credit mix than it does to your income.
Another opinion is that closing old credit cards, which are never used, helps keep a score. But in reality, closing such accounts will lead to a shorter credit history and lowering of the available credit limit, both factors that are harmful to your score.
Some think that missing a single due date won’t make a difference. But even one late payment can be reported to the credit bureau, and this record stays on your credit report for years, lowering your score and affecting your creditworthiness.
One typically assumes not having any credit history means a good score. However, with no credit activity there is no data to prepare a score, which makes you an increased risk for the lenders, as they have no information regarding repayment behavior.
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Your CIBIL score is very important, but banks also consider income, employment status, debt-to-income ratio, and liabilities. A good score helps, but it is just one of the factors that lenders will consider when evaluating your loan application.
Another popular myth is that all credit bureaus produce the same score. In fact, each bureau, CIBIL, Experian, Equifax, and CRIF High Mark, uses its own unique algorithm and set of data, and therefore, your score may be slightly different on each one.
Some believe being married or single changes your score. Your marital status is not a parameter in your credit score calculation. However, joint loans or shared credit cards with a spouse can impact your score based on their repayment behavior.
It’s generally accepted that paying the minimum on your credit card keeps your score safe, but this is a misconception. Paying only the minimum due leads to a growing interest charge on the remaining balance, an increase in credit utilization that can ultimately lower your score over time.
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Many people abandon efforts to maintain creditworthiness after suffering poor records and think that nothing can be done to get their credit back on track.
One should enlighten oneself with the credit score that banks actually use for people in banks in India to have a meaningful insight to them about loans, credit cards because of the importance of credit scores.
The most popular credit score used by the banks and financial institution in the country would be the CIBIL score. The CIBIL score one receives is somewhere in the range of 300 to 900, with high scores indicating better credit history and, thus, higher chances of gaining loan sanctioning.
Several factors contribute to the making of the CIBIL score. They are payment history, credit utilization, duration of credit history, types of credit, and recent inquiries. Banks depend on this score as a major indicator of your creditworthiness to approve or reject your application. Also, it decides the rate of interest given to you; higher scores will then typically mean lower loan rates.
Understand Which Credit Score Banks Use in India so that you can manage your credit. Check your score from time to time, and only put in place measures to rectify them if there are any issues, while also being good with your credit, and that should gradually be good for your finances.
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Most of the Indian banks check credit scores provided by CIBIL. It's the most trusted credit score while evaluating one's eligibility for loans and credit cards.
According to banks, a CIBIL score above 750 should be considered good. It indicates a responsible borrower, and the chances of being approved for the loan are higher.
Although CIBIL is largely used, banks may rely on scores obtained from Experian, Equifax, or CRIF High Mark based on individual lender policy.
Banks usually check the credit score to know how well the candidate has availed of credit in the past. The higher the score, the higher the chance of timely repayment of loans.
Yes, possible. However, it is very hard. A poor score might attract higher interest rates or even a flat-out rejection of loans. Improving the score increases your chances of approval.
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