What is Credit Score and Credit Report?

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What is Credit Score and Credit Report?

Credit Score is basically a three -digit number, ranging from 300 to 900, that acts as a measure of once credit worthiness. The score is calculated by considering once credit history and details found in Credit report. Credit Report comprises once Credit history with detailed information like credit card accounts,Loan, late payments details etc. Credit score is one of the important factor responsible for loan approval and credit card application. The more the Credit Score i.e near to 900, greater is the chances of being approved for new loans/Credit Cards.


Who Creates Credit Score/Reports?

 Credit Reports are generated by CIC (Credit Information Companies) licensed in India. These are:-

  1. Equifax
  2. TransUnion CIBIL
  3. Experian
  4. CRIF High Mark



What is Good Credit Score?



It depends! Each creditor decides how to use these numbers, but here are some basic guidelines:-

800 - 900 = Excellent
740 - 799 = Very Good
670 - 739 = Good
580 - 669 = Fair
300 - 579 = Bad



Factors affecting Credit Score:-


  1. Payment history for loans and credit cards:- Most Important ingredient in credit scoring,even one missed payment can have negative impact on once Credit Score.
  2. Credit Utilization:- It is calculated by dividing the total revolving credit you are currently using by the total of all yours revolving Credit Limit.
  3. Credit history length:- The longer your credit history, the higher your credit scores.
  4. Credit Mix:- Once may hold various kinds of Credit Accounts, such as education loan, mortgage,Credit card and Vehicle loans. This combination of Credit accounts is called the Credit Mix.
  5. New Credit:-  Too many accounts and Inquiries can indicate increase risk.



How to maintain a good CIBIL/Credit Score?


  1. Pay monthly installments on time to build a good track record.
  2. Manage credit card carefully and limit your usage.
  3. Choose longer loan tenors carefully.



Why should you maintain a good Credit Score?



There are several benefits of maintain a good credit score, some of them are given below:-

  1. Increase the chances of your loan application being approved.
  2. Quick approval of loans
  3. Access to Pre-approved loans
  4. Avail high Credit Card limit.
  5. Get Credit Card with better rewards and benifits.



Location: Delhi, India

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