Credit Scores

Understand what drives your credit score and how to build excellent credit that saves you money for life.

A credit score is a three-digit number that summarises your creditworthiness based on your borrowing and repayment history. Lenders use it to decide whether to approve loans and at what interest rate. A high credit score means lower interest rates on mortgages, car loans, and credit cards — saving you hundreds of thousands over a lifetime.

India: CIBIL Score (300–900)

TransUnion CIBIL is the most widely used credit bureau in India. A score above 750 is considered excellent and qualifies you for the best interest rates.

750–900: Excellent — best loan terms, lowest rates, easy approvals
700–749: Good — most loans approved, slightly higher rates
650–699: Fair — some lenders may hesitate, higher rates
Below 650: Poor — limited options, very high rates or rejections
Check free at: CIBIL.com (1 free report/year), or BankBazaar, Paisabazaar for unlimited free checks

US: FICO Score (300–850)

Most US lenders use FICO scores. A score above 740 is considered very good; 800+ is exceptional.

800+: Exceptional — best rates on everything
740–799: Very Good — near-best rates
670–739: Good — average rates available
580–669: Fair — subprime rates, higher costs
Below 580: Poor — very limited options
Check free: AnnualCreditReport.com (official), Credit Karma, Experian app

The 5 Factors That Determine Your Score

Understanding these factors shows you exactly where to focus to improve your score.

Factor	FICO Weight	What Helps
Payment History	35%	Never miss a payment — set autopay for minimums
Credit Utilisation	30%	Keep balances below 30% of credit limit; below 10% for best scores
Credit Age	15%	Keep oldest accounts open; do not close old cards
Credit Mix	10%	Having both revolving (cards) and instalment (loans) helps
New Credit	10%	Avoid opening multiple accounts in a short period

How to Build or Repair Your Credit Score

Whether starting from scratch or recovering from past problems, these steps consistently improve scores over 6–12 months.

Pay every bill on or before the due date — even one missed payment hurts significantly
Reduce credit card balances to below 30% of the limit (10% is ideal)
Do not close old credit card accounts — length of history matters
Dispute any errors on your credit report — errors are more common than people realise
Become an authorised user on a family member's old, well-managed account
A secured credit card (India: against FD; US: cash deposit) builds credit from zero

💡 Pro Tip: Set all credit card minimum payments to autopay. This eliminates the risk of a missed payment from forgetfulness — the number one credit score killer.

Key Takeaways

✓Payment history is the single biggest factor — never miss a due date
✓Keep credit card utilisation below 30% of your total credit limit at all times
✓Do not close old accounts — credit age counts in your score calculation
✓Check your report annually for errors and dispute anything inaccurate
✓A good credit score saves significant money on every loan for the rest of your life