What is a Credit Score & Factors affecting a Credit Score?

credit score is a numerical expression based on the analysis of a person’s credit history to represent the creditworthiness of that person. So as we understand it is very important or rather essential to have a good credit history. A credit score is a complex formula/number that evaluates a consumer’s creditworthiness and is based on credit history. Lenders use credit scores to evaluate the probability that an individual will repay his or her debts. A person’s credit score ranges from 300 to 900 in India. And it is generally believed that higher the score, the more financially trustworthy a person is considered to be.

A credit score plays a key role in a lender’s decision to offer credit. A credit score of 720 or above is generally considered good and may result in a borrower receiving a lower interest rate, which results in them paying less money in interest over the life of the loan. But let me reiterate once again that credit score is never ‘ the deciding factor’. Lenders look at the credit profile of the borrower which is much more broader.

We have four credit bureaus in India: CIBIL, CRIF Highmark, Experian and Equifax. All the four bureaus have their credit scores/reports. The scores may vary marginally primarily because each of the bureaus has different formula to calculate the score.

Once we know what is a score, how much is a good credit score the logical next question is where do I find my credit score and what are the factors affecting my score.

An individual can apply for his/her credit report with the score on all the four bureaus in India. When you apply for your own credit report the bureau generates a fully detailed report with your credit scores.

Factors affecting your  Credit Score

The five main factors affecting your credit score:

  1. Payment history
  2. Total amount owed
  3. Length of credit history
  4. Types of credit
  5. Number of requests for new credit.

Hence it is very important to understand and focus on each of these factors and work towards building a healthy credit profile.


Ms Aparna Ramachandra

Founder Director



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