What Is a Credit Score (CIBIL Score)?
A credit score is a three-digit number (300-900) that represents your creditworthiness. In India, CIBIL score is the most commonly used credit score by lenders.
Credit Score Ranges
300-549: Poor — loan applications will likely be rejected. 550-649: Fair — you may get loans but at higher interest rates. 650-749: Good — most loans will be approved at reasonable rates. 750-900: Excellent — you'll get the best rates and instant approvals.
How It's Calculated
Payment history (35%): On-time payments boost your score the most. Credit utilization (30%): Keep card usage below 30% of limit. Credit history length (15%): Older accounts are better. Credit mix (10%): Having both secured and unsecured loans helps. New credit inquiries (10%): Too many applications hurt your score.
Why It Matters
Your credit score affects loan approvals, interest rates, credit card limits, rental applications, and even job offers in some industries. A score above 750 can save you lakhs in interest over a home loan tenure.
How to Improve Your Score
Pay all EMIs and credit card bills on time. Keep credit utilization below 30%. Don't apply for multiple loans at once. Don't close old credit card accounts. Regularly check your report for errors and dispute them.