A credit score is a three-digit number that rates your creditworthiness, or how likely you are to repay a loan on time. It is based on your credit history, which includes information like your payment history, outstanding debt, and credit utilization.
Credit scores typically range from 300 to 850, with higher scores earning you greater approval odds and more competitive rates. The credit score model was created by the Fair Isaac Corp., now known as FICO, and is used by most lenders in India and abroad
Lenders use your credit score to determine if they should offer you a loan or credit, and what terms they should offer you. A higher credit score can help you qualify for lower interest rates, longer repayment periods, and higher loan amounts
Your credit score is influenced by five main factors: your payment history, your credit utilization, the length of your credit history, your credit mix, and your new credit inquiries. Each factor has a different weight in the calculation of your score
To improve your credit score, you should pay your bills on time, keep your credit card balances low, avoid applying for too many new accounts, maintain a healthy mix of credit types, and check your credit report regularly for errors
Your credit score is not fixed and can change over time depending on your financial behavior and credit activity. You can check your credit score for free through financial companies, like loan or credit card providers, or through online platforms
Having a good credit score can help you achieve your financial goals, such as buying a home, a car, or starting a business. It can also save you money on interest and fees, and give you access to better financial products and services