Your credit score is a number that represents a person’s creditworthiness and it matters. It affects your ability to get loans, credit cards, and favorable interest rates. Learn more now.
2. What is a Credit Score?
A credit score is a three-digit number that represents an
individual’s creditworthiness. Timely repayment of loans
and other borrowings show well on your credit history and
improve your credit score, while missing payments can lead
to your credit score decreasing, signifying poor borrowing
habits to your card provider.
3. Credit Score Range
The credit score ranges from 300 to 900 points, with a low score
being bad for your credit health. A good credit score is important
because it helps determine how much you can borrow and on
what terms. The higher your score, the lower your interest rates
will be and the better deals you can get when applying for a credit
card. Lenders also look at your payment history when determining
whether to approve an application for a loan or line of credit.
4. Factors Affecting Credit Scores
Consumer credit scores are based on three main factors: payment
history (30%), payment type (15%), and amount financed (30%).
Payment history includes recent payments, missed payments and
late payments. Payment type includes methods of payments
made such as cash advances, auto loan repayments and
installment loans. The amount financed includes all types of
loans, including mortgages and leases.
5. How to Check Your Credit Score?
To understand your credit history and get better interest
rates and credit card spend limits, it is important to
improve your credit score. However, you cannot improve
your credit score if you do not know it. This is where credit
rating bureaus like Experian, CIBIL, CRIF, Equifax and more
come in. You can submit the necessary personal
information with any one or more of these credit bureaus
to receive a report of your credit score.
