What is a Credit Score?

A credit score is a crucial financial metric used by lenders in India to evaluate your creditworthiness. It represents your credit history and provides insights into your ability to manage debt responsibly. The concept of a credit score is essential because it helps lenders assess the risk associated with lending money to a particular individual.

In India, credit scores are primarily calculated by credit bureaus such as CIBIL (Credit Information Bureau India Limited) ™, Experian, Equifax, and CRIF High Mark. These bureaus collect and analyse financial data, including credit card usage, loan repayments, and other financial transactions, to generate a numerical score that typically ranges from 300 to 900.  

A higher score indicates better creditworthiness and a lower risk for lenders.

Having a good credit score is vital because it directly impacts your ability to secure loans, credit cards, or mortgages.

A high score can also help you access credit at favourable interest rates. In contrast, a low score can result in loan rejections or higher interest charges. Therefore, maintaining a healthy credit score involves making timely payments, managing credit utilisation, and avoiding defaults.