Your credit score, explained
A credit score is a three-digit summary of how you have handled borrowed money. Lenders use it to decide whether to lend and at what rate.
The basics
Four credit bureaus operate in India: TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Each scores you from 300 to 900 using the loan and card records that lenders report. Scores differ slightly between bureaus. As a broad guide, 750 and above gets the best offers, 700 to 749 is good, and below 650 makes approval harder and costlier.
What moves the score
- Repayment history. The largest factor. A single EMI or card payment that is 30 days late can stay on your report for years.
- Credit utilisation. The share of your card limit you use. Staying under about 30% helps; maxed-out cards hurt even if paid in full.
- Length of history. Older accounts in good standing help, so think twice before closing your oldest card.
- Credit mix. Some secured credit, such as a home or car loan, alongside unsecured credit reads better than cards and personal loans alone.
- Recent applications. Each loan or card application triggers a hard enquiry. Several in a short span signals stress.
Raising a low score
- Automate at least the minimum due on every card and every EMI so nothing is ever late.
- Pay card bills in full. Carrying a balance costs 30% to 45% a year in interest and raises utilisation.
- Ask for a higher limit on a card you manage well, then keep spending the same.
- Check your report for errors, such as a closed loan shown as open or an account that is not yours, and dispute them with the bureau.
- Settle nothing. A loan marked “settled” is worse than one marked “closed”. Pay in full where you can.
Lenders now report to bureaus every fortnight, so good behaviour shows up faster than it used to. Even so, expect meaningful improvement to take six to twelve months.
Checking is free and harmless
You are entitled to one free full report a year from each bureau. Checking your own score is a soft enquiry and never lowers it. Be wary of apps that ask for wide permissions in exchange for a score.
No history?
A missing score is different from a bad one. A secured credit card issued against a fixed deposit, used lightly and paid in full, builds a record within a few months.