A credit score is a three digit summary of how you have handled borrowed money. In India the best known one comes from TransUnion CIBIL, and there are three other bureaus - Experian, Equifax and CRIF High Mark. Scores run from 300 to 900. Most lenders treat anything above 750 as comfortable, and many will still lend below that at a higher rate.
What the score is built from
- Repayment history. Whether you paid on time, every month, on every loan and credit card. This carries the most weight, and a single missed payment stays on the report for years.
- Credit utilisation. How much of your credit card limit you use. Running close to the limit month after month reads as pressure on your cash flow, even if you pay in full.
- Age and mix of credit. A long, clean history helps. A mix of secured loans (home, car, gold) and unsecured ones (personal loan, card) reads better than only unsecured borrowing.
- New enquiries. Every time you formally apply, the lender pulls your report. Several applications in a short period look like you are short of money.
Checking your own score does not hurt it
When you check your own score it is recorded as a soft enquiry and does not affect the number. Only a lender's enquiry for a live application is a hard enquiry. You are also entitled to one free full credit report from each bureau every year, which is worth pulling because it shows the account level detail behind the score.
If your score is low
There is no shortcut and nobody can legally delete correct information from your report. What works is ordinary and slow:
- Pay every EMI and card bill on or before the due date - set a standing instruction so it is not left to memory.
- Bring card usage down well below the limit, and keep it there for a few cycles.
- Do not apply to five lenders in one week. Compare first, apply once.
- Read your report and dispute anything that is factually wrong. The bureau has to investigate a dispute you raise.
- Do not close your oldest card just because you do not use it. Age of credit counts.
A score built back up over six to twelve months of clean repayment is worth far more than any quick fix anyone promises you.