Credit Score Guide — Your Financial Reputation

What is a Credit Score?

A credit score is a three-digit number (300-900) that represents your creditworthiness — how likely you are to repay borrowed money on time. In India, credit scores are maintained by four bureaus: CIBIL, Experian, Equifax, and CRIF High Mark. CIBIL score is the most widely used by banks and lenders.

Your credit score directly affects your ability to get loans, credit cards, and the interest rates you are offered. A score above 750 is considered good and gets you the best loan terms. Below 650 makes it difficult to get approved for most loans.

What Affects Your Credit Score

• Payment history (35%) — The most important factor. Even one missed EMI or credit card payment can drop your score by 50-100 points. Always pay at least the minimum amount on time
• Credit utilization (30%) — How much of your available credit you use. Keep usage below 30%. If your credit card limit is ₹1 lakh, do not use more than ₹30,000
• Credit history length (15%) — Longer credit history = better score. Do not close your oldest credit card even if you do not use it much
• Credit mix (10%) — Having a mix of secured (home loan, car loan) and unsecured (credit card, personal loan) credit improves your score
• New credit inquiries (10%) — Every time you apply for a loan/card, a "hard inquiry" is made. Too many inquiries in a short period lower your score

How to Improve Your Credit Score

• Pay all EMIs and credit card bills on time — Set up auto-pay to never miss a due date
• Keep credit utilization below 30% — Request a credit limit increase or use multiple cards to spread usage
• Do not close old credit cards — They contribute to credit history length
• Check your credit report annually — Dispute any errors. You get one free report per year from each bureau
• Avoid multiple loan applications — Space out loan/card applications by 3-6 months
• Become an authorized user — If you have no credit history, ask a family member with good credit to add you as an authorized user on their card