Not many of us are enlightened with all the details regarding an individual’s credit score in India. In simple terms, a credit score is a numerical value based on the analysis of a person’s credit records that represent his or her creditworthiness. These scores are computed by credit bureaus with the data sourced from lending institutions.
In India, four companies determine the credit score, out of which the CIBIL score is the most popular. This is a 3-digit number which shows a summary of one person’s credit history and rating. This score can be from 300 to 900 (the latter is the best score). While some people do not have any credit history and so their score will be -1. In case the credit history is less than six months then your score will be zero. It can take up to 6 months to build your first credit score.
An individual’s credit score in India is computed by CIBIL, Experian, Equifax and Highmark.
Many of you are wondering what went wrong with your credit score, here are some factors that impact your credit scores: –
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Payment history: – This is one of the factors that can impact your score. This factor accounts 35% approx. of your total score. A late record of payment in your current and past credit account will lower the score. Be consistent about making any payments on time and make a positive impact on your score.
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The public records: – Public records matter. These include bankruptcies, judgments and collection items can lessen your score value. Be aware since sometimes you cannot avoid them.
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The length of your history: – We mean credit history. The longer your credit history is the better it is. In some cases, it can increase and have a positive impact on the credit score. Credit history determines around 15% of your score.
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Inquiries: – Whenever another person gets your credit report like a lender, landlord, an insurer, a number of inquiries can have a negative impact. Your new credit accounts and inquiries make up approx. 10% of your score.
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Too many accounts: – Shut all the extra unwanted accounts which you have opened and probably forgotten about. This makes up around 10% of your score. So why do you want to lose even 10% of your credit score. It is essential. Also, closing an account will not remove all negative repayment records. So, if you have been paying up your loan account or credit card irregularly, then it reflects badly on your credit report. The bank will not erase all the evidence. That’s why maintaining a good credit repayment history is extremely important.
Follow few basic phases to increase your creditworthiness. Why lower it by being irregular? Some people think their age makes an impact or difference to the score; let us tell you that it is not going to change your credit score at all.
With a better score, you will be seen creditworthy to be offered many services with bigger loans and higher credit card values. Get faster loan approvals with an incredible credit score!
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