With great credit comes great credibility!

Have you ever wondered why getting a loan becomes a nightmare for most people? Why is it that some people have to pay a higher interest rate and how to reduce it? These are a few common questions that many people have on their mind. Let’s find out the answer to these questions.

All of the above situations depend on your credit ability to pay back a borrowed amount.  It shows well-suited to receive a loan) or not. It lies between the range of 300 and 900. It’s like the result of board exams; the higher your marks, the better college you get into. Similarly, if you have a good credit score, you will get more benefits. It is calculated by the credit bureaus after considering various factors. Lenders and banks use the credit score of an individual to evaluate the risk involved in lending them a loan, the interest rate on it and credit limit.

score. Credit score is the measure of an individual’s whether you are credit-worthy (a person who is

Do you know what affects your credit score? Have a look:

PAYMENT HISTORY : Your payment history is one of the most important aspects that play a role in determining your credit score. Defaulting loans and EMIs and making late payments can harm your credit score. If you are a regular defaulter, your credit score gets adversely impacted. The later you make your payments, the more it affects your credit score. One should always try to repay their loans on time to maintain a healthy credit score.

TYPE OF LOAN (credit mix): Your credit score depends upon factors like the period of the loan and whether it is secured or unsecured. In a secured loan, the creditor has the right on the collateral in case you don’t pay the loan back. (example: mortgaging by keeping your car, house, property, etc. as collateral) , whereas in an unsecured loan, the loan is given based on your creditworthiness. (example: credit card)

So yes, maintaining a credit mix of both secured and unsecured loans for both short and long periods is vital for a good score. Secured loans provide the banks with a guarantee that they will get their money back. Whereas, unsecured loans will determine how responsible you are. So it’s always better to have a credit mix.

CREDIT UTILISATION: It’s a comparison between the amount of credit that you have used and the amount of credit you have been given by the creditor.

An increase in the credit utilisation means an increase in debts which negatively impacts the score.

CREDIT ENQUIRIES: Too many credit enquiries in a short period of time can adversely impact your credit score. It highlights your urgency in the requirement of the loan which shows that you have less liquidity, thus, making it a risky loan for the lender.


  • If you have a good score, you can get loans easily, obtain a low interest rate on them and can even get a higher credit card limit.
  • A low interest rate can help you save money; this will help you increase your savings and decrease your debt.
  • It’s important to determine your score so that lenders have an idea on your credibility.
  • A good score can also help you arrange for heavy expenses like rent, a car, a house, etc.
  • Credit score determines your negotiating power and can help you crack good deals.

Determining your credit score is very important because the lenders will decide whether they want to offer you credit or not. Hurry up and get your credit score immediately!

You can get your credit score from Credit Bureaus in India, where you need to submit your Pan Card details.  The six main credit bureaus are:

  • CIBIL, the most trusted credit bureau 
  • Experian
  • Equifax – the range lies between 1 and 999. 999 being the highest.
  • ICRA – Investment Information and Credit Rating Agency
  • CRIF High Mark

How much score is a good score?

If you don’t have a credit history, then you cannot calculate your credit score.

Score Range


What does the grade indicate?

300- 549


This is regarded as a highly negative score which is considered unfavourable by all financial institutions.

550- 649


This is deemed to be a high-risk category for credit providers. It shows the borrower is not financially sound enough to repay the loan. You will need a guarantor to vouch for you even if granted a loan with this score.

650- 699


This falls in neither good nor bad scenario for creditors. In case you are granted a loan, you won’t be receiving any added benefits.

700- 749


Borrowers in this category are considered to be dependable and have a good chance of their loans getting approved. However, the terms provided by the lenders might not be as lucrative as the borrowers may want.

750- 900


Borrowers falling in this category generally are the ones who do not falter their debt payments and have no negative remark on their credit report. You can avail various loan benefits and favourable deals if you have a score belonging to this category.

If your score is below 650 then you should try to improve it, otherwise, you won’t be able to get credit. Scores above 650 are eligible for loans. The range of scores from 750 to 900 get the maximum benefits.

So you want to increase your credit score, huh? Here’s how:

Earning a higher credit score is always advisable to be eligible for big loans whenever required. Let’s have a look at these points to know how we can move a grade or two up in our credit score.

  • Ensure that you pay your bills on time. Set up reminders if required. Defaulting payments will only add to your misery.
  • Don’t apply for too many loans at the same time just to have a better credit mix. It will increase your credit inquiries and not serve any purpose for you.
  • Keep a check on your credit score and be informed of your credit situation. Verify whatever is reported on your credit report and take stock of any inadequacies you find.
  • Don’t stop using older cards as this will reflect in your credit history. Having more than a single card will mean that you have a higher credit limit. In this way, you can spend from different cards and maintain a good credit utilisation ratio.
  • Monitor your joint accounts well. Make sure that they are well-serviced and you don’t have to pay for your co-holders’ negligence.


You should keep reviewing your credit history and card statement. While doing so, keep a track on the number of loans you have taken, your outstanding loan, number of credit cards you own, number of enquiries you have done about credit and loans. This won’t help you in increasing your scores, but it will help you analyze your credit report better.

Credit score is an important tool in case of emergencies. Keep working hard so that you have a good score and don’t face problems while applying for loans. It is essential to have a look at your credit score at least once a year. Being aware of your situation is the first step towards making constructive decisions for your development.


Team Investoday