In India, the credit score has become a near-obsessive number for many. From getting loans to securing a credit card, this three-digit figure can influence your financial life more than your monthly income or savings. But why do we place so much importance on it?
What Is a Credit Score?
A credit score is a numeric representation of your creditworthiness. In India, it typically ranges from 300 to 900, with higher numbers indicating better financial reliability. It is calculated based on:
Payment history of loans and credit cards
Outstanding debt amounts
Duration and types of credit accounts
Recent credit inquiries
Why the Obsession?
Loan Approvals Depend on It
Banks and NBFCs use credit scores to determine your eligibility and interest rates for loans. A high score can make approvals easier and cheaper.
Credit Card Access
Premium credit cards often require excellent scores, affecting your ability to access rewards and benefits.
Lower Interest Rates
A better score can reduce interest rates on personal loans, home loans, and auto loans, saving thousands over time.
Financial Reputation
Credit scores are increasingly seen as a reflection of your financial discipline, impacting credibility with lenders and sometimes even landlords or employers.
Are We Overdoing It?
While credit scores are crucial, the obsession sometimes leads to:
Excessive focus on minor credit actions
Anxiety over short-term dips in scores
Overuse of credit monitoring apps
Experts suggest balancing credit score awareness with overall financial health, including savings, investments, and budgeting.
How to Maintain a Healthy Credit Score
Pay Bills on Time – Late payments hurt your score the most.
Keep Credit Utilization Low – Use only a portion of your available credit.
Avoid Multiple Loans at Once – Frequent applications can lower your score.
Check Score Regularly – Correct errors promptly to avoid unnecessary drops.
Maintain Long-Term Credit Accounts – Longevity of accounts improves reliability.
Conclusion
The three-digit credit score is more than just a number—it’s a key to financial opportunities in India. While obsession isn’t necessary, understanding and maintaining a good score can open doors, save money, and boost your financial confidence.
FAQs
Q1. What is a good credit score in India?
A score of 750 and above is considered excellent, while 700–749 is good.
Q2. How often should I check my credit score?
Checking every 3–6 months is sufficient to stay informed without obsessing.
Q3. Can my score improve quickly?
Yes, by paying off dues, keeping utilization low, and avoiding multiple credit inquiries.
Q4. Does having no credit history affect the score?
Yes, no credit history can make your score low or non-existent, which may impact loan approvals.
Q5. Are credit scores permanent?
No, they change over time based on your credit behavior and repayment patterns.
Published on : 24th September
Published by : SMITA
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