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What is a Credit Score and How to Improve It?
Your Credit Health Matters — Know It, Grow It
A credit score is a 3-digit number that represents your creditworthiness — how likely you are to repay your debts on time. It is one of the most important factors lenders check before approving a loan or credit card.
What is a Credit Score?
Range: 300 to 900
Ideal Score: 750 and above is considered excellent
Issued by: Credit bureaus like CIBIL™, Experian, Equifax, and CRIF High Mark
Used for: Loan approvals, interest rate decisions, credit card eligibility, and more
| Score Range | Credit Quality | Impact |
| 750 – 900 | Excellent | Eligible for best interest rates and loan terms |
| 700 – 749 | Good | Favorable loan terms |
| 650 – 699 | Fair | May face higher interest rates |
| 550 – 649 | Poor | Higher interest rates, limited credit options |
| Below 550 | Very Poor |
How is Credit Score Calculated?
| Factor | Weightage |
|---|---|
| Repayment History | 35% |
| Credit Utilization | 30% |
| Credit History Length | 15% |
| Credit Mix (Loan Types) | 10% |
| New Credit Inquiries | 10% |
Why Your Credit Score May Be Low
Missed or delayed EMIs/credit card payments
High credit card usage (above 30–40% of limit)
Multiple loan applications in a short time
Lack of credit history
Loan defaults or settled loans
How to Improve Your Credit Score
Pay EMIs & Credit Card Bills on Time
Timely payments are the single biggest factor. Set reminders or enable auto-debit.Maintain a Low Credit Utilization Ratio
Use less than 30% of your total credit limit. If you’re nearing it often, request a higher limit.Don’t Apply for Too Many Loans
Multiple hard inquiries hurt your score. Apply only when necessary.Check Your Credit Report Regularly
Monitor for errors or fraudulent accounts and raise disputes with the bureau if needed.Build a Balanced Credit Mix
Having both secured (home/car loan) and unsecured (credit card/personal loan) credit helps.Avoid Settling or Defaulting on Loans
Always aim to close loans fully. A “settled” status affects your credit history negatively.
How Long Does It Take to Improve a Credit Score?
It can take 3 to 6 months to see noticeable improvement with consistent good habits. Severe defaults may take longer to heal but can still be improved over time.
Pro Tip:
Even if your credit score is low, you can explore credit builder loans, secured credit cards, or co-applicant based loans to build your credit profile steadily.