Education and Beyond

What is a Credit Score? How to Improve Your Credit Score

By

Krishna Reddy

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What is a Credit Score?

Your credit score is a 3-digit number ranging from 300 to 900. It reflects how likely you are to pay back your debt. Banks, non banking financial companies, and money lenders use your credit score to determine your creditworthiness and to decide whether they should approve your application for a personal loan or a credit card.

CreditReporting & Monitoring

So the closer you are to the score of 900, the stronger is your credit report and the higher are your chances of getting approved for your loan application.

How does it affect Your Credit Report?

A credit report has all the records of your debt history and repayments including your credit cards, personal loans, automotive loans, education loan, and home loan. It includes your personal information like your name, address, contact details, business address, and PAN card.





Your credit report will also reflect the date on which you have taken the loan, your current balances, whether you have made the payments on time and if the accounts are in arrears.

It will also show how well an individual has kept up with his/her debt repayments for all previous and current lenders along with the status of the loan – settled, ongoing, doubtful, etc.

What is a CIBIL Score and why does it Matter?

The CIBIL Score provides banks and money lenders the ability to differentiate between people who have honoured their liabilities in a responsible manner and people who have defaulted. Those who have managed their financial obligations in a timely manner build a positive credit score and reputational collateral which puts them in a better position to negotiate with lenders.

So the CIBIL score plays a crucial role in the application process whether you are applying for a credit card or a personal loan. The first thing that the lender checks

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