Learn what a credit score is in India, why it matters for loans and credit cards, and discover 5 simple ways to improve your score fast. Includes tips on EMIs, credit card usage, and credit mix.
What Is Credit Score?
A credit score is a 3-digit number (usually between 300 and 900) that shows how trustworthy you are with money. In India, it’s provided by agencies like CIBIL, Equifax, and Experian.
- Higher score = better chances of getting loans and credit cards.
- A score above 750 is considered good.
- Even if you don’t need a loan now, a good credit score gives you better interest rates and faster approvals in the future.
Why It Matters
Banks and lenders check your credit score before approving:
- Home loans
- Personal loans
- Credit cards
- Even some job applications!
5 Simple Ways to Improve Your Credit Score
- Pay EMIs and credit card bills on time
Late payments hurt your score the most.
In India, your payment history makes up 30–35% of your credit score. Even one missed payment can lower your score significantly.
- Keep credit card usage below 30%
Don’t max out your card limit.
For Example:
Let’s say your credit card has a limit of ₹1,00,000.
30% of ₹1,00,000 = ₹30,000
To maintain a healthy credit score:
Try to spend less than ₹30,000 on your card in a billing cycle.
Even if you pay the full bill later, high usage can signal risk to lenders.
Why?
- Using more than 30% of your limit regularly can
make you look credit-hungry.
- It may lower your credit score, even if you pay on time.
- Avoid too many loan applications
Each application creates a “hard inquiry” that can lower your score.
For Example:
If you apply for:
1 personal loan
2 credit cards
1 car loan
All within a month, your credit report will show 4 hard inquiries.
That’s a red flag for lenders.
- Check your credit report regularly
Spot and fix errors early.
Spot and fix errors early.
For Example:
Sometimes, credit reports contain mistakes like:
Wrong loan amounts
Missed payments that you actually paid
Accounts you never opened
Fixing these early can prevent damage to your score.
- Maintain a healthy credit mix
A balance of secured (home loan) and unsecured (credit card) credit helps.
For Example:
A credit mix refers to the different types of credit you use. In India, this typically includes:
Secured loans (e.g., home loan, car loan)
Unsecured loans (e.g., personal loan, credit card)
Lenders and credit bureaus like to see that you can manage different types of credit responsibly.
It shows:
Financial maturity
Ability to handle both long-term and short-term debt
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