If you are in the market for a credit card, a term you will come across often is Credit Score. Your credit card provider will run a credit score check on you to decide the spending limit you get on your card. While your income is also a factor considered, many applicants often overlook their credit score. So, check your Credit Score and see where you stand in the eyes of lenders!
A credit score is a three-digit number that represents an individual’s creditworthiness. It ranges from 300 to 900 points, with a low score being bad for your credit health.
Your credit score is calculated by taking various factors into account, your payment history and credit utilisation ratio have a strong influence on your score. The existence of a long credit history have a medium impact on your credit score while the total number of dues accounts on you have little to no impact on your credit score.
A credit score of 750 and above is considered ideal and can help you get more favourable rates and loan amounts.
You can check your credit score by visiting a credit bureau’s website like CIBIL, CRIF, Equifax, Experian or others and submitting the necessary personal information.
Credit scores update every 30-45 days when credit institutions submit there report to CIBIL. Beyond that, the Credit Information Companies (Regulation) Act of 2005 prohibits CIBIL from changing any database information without the relevant information.
There are multiple factors that can damage your credit score. These factors include, missing payments, high credit utilisation ratio, paying only the minimum amount due, poor credit mix, and more.
Payment defaults can remain on your credit history for at least 7 years. Bigger defaults like bankruptcy can stay on your credit report for 10 years or more.
Yes, you can improve your credit score by making timely payments of your dues, possessing a better credit mix, avoiding defaults, and through proper credit utilisation.
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