What is a credit score and how do I check it?


A credit score is a number that indicates an individual’s creditworthiness. It is used by financial institutions and lenders to assess the ability of their potential client to repay their loans or financial debts. This score is generated by the credit bureaus. In India, there are a total of four credit bureaus: TransUnion CIBIL, Experian, CRIF High Mark and Equifax.

The CIBIL™ score is perhaps the best known score credit score. It is a three-digit number between 300 and 900 and recognized internationally. The score is obtained by examining 13 categories of information about the person evaluated.

In this article, in addition to discussing how you can check your CIBIL score online, we also look at how a credit score is calculated, as well as the effects of a bad credit score and how to fix it.

Check your credit score online

You can easily check your credit score online with any of the four accredited credit bureaus in India, and even receive one free credit report per year. Just follow the simple steps below to check your credit score online.

  • Go to the credit bureau website, be it CIBIL, or Experian, or Equifax, or CRIF Highmark.
  • Next, create an account on the website by providing relevant information such as name, contact details, etc. If you already have an account, log in using your credentials.
  • After that, fill in the form with the details including UID, PAN number, etc. and submit it.
  • You will receive an email to verify your identity, verify yourself, and then you will be redirected to the website.
  • After verification, you may need to provide additional information regarding your credit card or loans taken out.
  • Once you have provided all the necessary details, the credit report, bearing your credit score, will be emailed to the registered email id.
  • If you wish to receive your credit report more than once a year, you can make the necessary payments to the credit bureau and you will receive the same.

Factors that will affect your credit score

Credit scores are automatically calculated from personal/business credit report information. Some of the main factors that affect credit scores are:

  • Composition of credit
  • Payment history
  • Loan term
  • Use of credit
  • Credit applications

There is a common misunderstanding that the income tax slab FY 2021-22 of which you are a part will affect your credit score. This is not the case. Credit scores depend solely on credit history and have nothing to do with annual income.

The effects of a bad credit rating

Generally, a credit score between 800 and 850 is considered excellent, while scores between 670-739 and 740-799 are considered good and very good, respectively. Credit scores between 580 and 669 are considered acceptable, and those between 300 and 579 are considered poor. What if your credit score is bad?

  • Getting loans will become difficult – Having a bad credit rating will lengthen the whole process of getting loans, as rigorous background checks and checks will be done before the loan is approved. In fact, you might even face loan application rejection from major lenders in the market.
  • Interest rates will be higher – Another effect of a bad credit rating is that it raises the interest rate on the loans you receive.
  • The conditions will not be so favorable – A bad credit rating causes you to lose some of the leverage and control over loan or insurance terms that you have as a borrower/buyer.
  • The premium will be higher – A bad credit score will also increase the premium you will have to pay on insurance plans.

Fix a bad credit score

India’s private credit bureau coverage increased by 21.4% in 2106 at a whopping 63.1% in 2019. This clearly shows that bad credit can be fixed, and here’s how you can do it.

  • Monitor Credit Report – Continue to check your credit report regularly so that you are aware of any changes or errors in the report. As soon as you spot flaws, have them rectified, so that no erroneous information is used to generate a credit score.
  • Keep your CUR below 30% – The CUR, or Credit Utilization Ratio, is the ratio of the credit balance to that of the credit limit. It is advisable to keep the CUR at 10% if possible, and if not definitely below 30%. This will facilitate the repayment of debts. If you’ve already used more than that, try to pay off the larger debts first.
  • Avoid late payments – Credit ratings can be significantly improved if credit is repaid before the due date. The monthly repayment pattern is monitored by the credit bureaus to generate credit scores. Therefore, as the full repayment history of the loan is taken into account, a history of prepayments will definitely increase your score.

These are just a few of the many ways you can boost your credit score. If you haven’t taken credit anywhere, your credit score will be 0. You can build a good credit score using different forms of credit – both secure and unsecured and monitor it closely by checking your CIBIL score online.

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