What is Credit Score & How Are They Calculated?

Kishan Thakkar K

Introduction

A credit score is a three-digit number between 300 and 900 that indicates the creditworthiness of a credit card holder or an individual taking out a loan. Potential lenders in India use CIBIL, TransUnion, Equifax, Experian, and CRIF High Mark credit scores in order to grant loans.

Credit scores represent a borrower’s credit and repayment history, how well they utilize credit, how long they paid back previous debts, etc. In India, banks have a limited ability to grant loans, but if your credit score is 900, your chances of being approved are higher.

Credit scores of 750 and above are considered ideal by banks and non-bank finance companies.

Credit Score and How it is Calculated?

A score of 750 or above is considered ideal by most credit bureaus. Credit scores are calculated by taking factors like payment history, credit utilization, credit age, and credit type into account.

  • Payment History – High Impact
  • Credit Utilization Ratio – High Impact
  • Age of the Credit – Medium Impact
  • Total Accounts – Low Impact

Best Ways to Improve your Credit Score

  • Identify and rectify errors in the score report
  • Maintain Older Credit Cards
  • Make Timely Repayments
  • Try to Have Different Forms of Credit
  • Avoid Racking Up Debts
  • Negotiate your Credit Card Limit with the Bank
  • Go for Long-term Loans

Conclusion

I am sure you have found the blog helpful in understanding a bit about credit scores. However, if you have any questions or comments, you can reach out to us at info@roodland.com.

Any concerns or suggestions you have will be taken into consideration.

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