Does every new mutual fund investment or fixed deposit increase your CIBIL score?

New mutual funds or fixed deposit investments won’t directly impact your CIBIL score, as only how you manage your debt shapes the credit score.

However, some factors relating to savings and investments may indirectly affect your CIBIL or your credit score.

If you want a high credit score, ensure you are using credit responsibly and building financial discipline by saving and investing regularly.

What’s a CIBIL score?

A CIBIL score is a three-digit numeric summary of your credit history, depicting your creditworthiness. The CIBIL score is given by the Credit Information Bureau (India) Limited (CIBIL), which is one of the credit information bureaus in India.

CIBIL score is calculated on the basis of your financial activity and credit history found in the CIBIL Report, also known as Credit Information Report (CIR).

Banks and other financial institutions consider the CIBIL score to evaluate an individual's creditworthiness before giving them a loan or credit.

What does CIR show?

A CIR shows an individual’s debt repayment history across their loans, credit cards and other credit sources over a period of time. It's important to note that the CIR doesn’t include the details of one’s savings and investments, as there’s no debt or repayment behaviour to be noted in these.

“A CIR does not contain details of your savings, investments or fixed deposits,” CIBIL’s official website states.

Indirect impact

However, mutual funds, fixed deposits and other investment tools can indirectly impact your credit score through various financial behaviours. Here is how:

As CIBIL score also depends on your payment history, regular investment can have a positive impact on your financial history and can boost your credit score. While regular SIP payments can help you improve your credit score, missed investments or SIP bounces can’t impact your credit score as they’re not reported to CIBIL.

Further, factors like having a diversified portfolio can also show banks and financial institutions that you manage your finances responsibly.

Additionally, it is important to note that if you have taken a loan against your fixed deposit or mutual fund units, like an overdraft facility, it would be an important factor for your credit score, as it will be on your CIR.