Credit Score Importance
Understand your credit score and its impact on your financial future
What is Credit Score?
A credit score is a 3-digit number (300-900) that represents your creditworthiness. It's calculated by credit rating agencies like CIBIL, Experian, Equifax, and CRIF High Mark based on your credit history and financial behavior.
Higher scores indicate lower credit risk and make you more attractive to lenders, resulting in better loan terms and interest rates.
Credit Score Ranges
300-549 - Poor
Very high risk, difficult to get loans/cards
550-649 - Fair
High risk, higher interest rates, limited options
650-749 - Good
Moderate risk, approved but with conditions
750-849 - Very Good
Low risk, better rates and easier approval
850-900 - Excellent
Minimal risk, best rates and instant approval
5 Factors Affecting Credit Score
Payment History (35%)
On-time payment is most important
Late or missed payments significantly lower your score
Credit Utilization (30%)
Keep usage below 30% of limit
Higher usage indicates financial stress
Credit Mix (15%)
Mix of secured & unsecured credit
Diverse credit types show better management
Credit Age (10%)
Older credit history is better
Keep old accounts open, longer history = higher score
Credit Inquiries (10%)
Too many inquiries lower score
Each application triggers hard inquiry
Impact on Financial Products
Personal Loan
Score 750+
₹15 lakhs at 8-9% interest
Score 650
₹10 lakhs at 11-12% interest
Credit Card
Score 750+
₹5 lakhs limit, instant approval
Score 650
₹1-2 lakhs limit, longer process
Home Loan
Score 750+
Full amount at 6.5% interest
Score 650
70% amount at 8-9% interest
Auto Loan
Score 750+
90% value at 7% interest
Score 650
60% value at 10% interest