Your credit score is one of the most important numbers in your financial life. It decides:
✅ Whether you get a loan or credit card
✅ How much interest you pay
✅ How fast approvals happen
In India, lenders commonly rely on credit reports maintained by bureaus such as TransUnion CIBIL to assess borrower risk.
The good news?
Credit score is not permanent — you can improve it with smart habits.
What Is a Credit Score?
A credit score is a 3-digit number that reflects your borrowing behavior.
Typical Score Range in India:
| Score | Meaning |
|---|---|
| 750 – 900 | Excellent |
| 700 – 749 | Good |
| 650 – 699 | Fair |
| 550 – 649 | Poor |
| Below 550 | Very risky |
Most banks prefer 750+ for best interest rates.
How Credit Score Is Calculated
| Factor | Weight |
|---|---|
| Payment history | 35% |
| Credit usage (limit use) | 30% |
| Credit age | 15% |
| Credit mix | 10% |
| New credit inquiries | 10% |
✔ Most Important Rule
Pay EMIs and credit card bills on time — always.
Even one delay hurts badly.
What Lowers Your Credit Score
Late or missed payments
Using more than 30–40% of credit limit
Too many loan applications at once
Defaulting on loans
Closing old credit accounts unnecessarily
How to Improve Your Credit Score (Step-by-Step)
1️⃣ Never Miss Due Dates
Set auto-debit or reminders.
2️⃣ Keep Credit Usage Low
If limit is ₹1 lakh, use under ₹30,000 ideally.
3️⃣ Pay Full Credit Card Bill
Avoid minimum due trap.
4️⃣ Don’t Apply for Too Many Loans
Each inquiry lowers score temporarily.
5️⃣ Keep Old Accounts Active
They build long credit history.
6️⃣ Mix Credit Wisely
Having both loans + cards helps score.
How Long Does Improvement Take?
| Action | Time Impact |
|---|---|
| Paying dues regularly | 2–3 months visible |
| Clearing defaults | 3–6 months |
| Big score jump | 6–12 months |
Consistency is key.
Real Example
Rohit had a score of 620 due to late card payments.
He:
✔ Paid all dues
✔ Reduced card usage
✔ Stopped new loan apps
After 8 months → Score rose to 760
Now he gets lower interest home loan offers.
Benefits of High Credit Score
Lower interest rates
Faster loan approvals
Higher credit limits
Better negotiation power
More financial freedom
Common Credit Score Myths
❌ Checking your score lowers it → FALSE
❌ Having no loan is good → FALSE (no history hurts)
❌ Closing cards improves score → FALSE
Key Takeaways
Credit score reflects financial discipline
750+ unlocks best loan offers
On-time payment is most powerful factor
Low credit usage boosts score fast
Patience + consistency = success
Frequently Asked Questions (FAQs)
1. What is a good credit score in India?
750 and above.
2. Can I improve credit score in 1 month?
Small improvement possible, big change takes months.
3. Does paying minimum due help score?
It avoids default but full payment is better.
4. How often should I check credit score?
Once every 2–3 months.
5. Does salary affect credit score?
No — only repayment behavior matters.
6. Is credit score important for personal loans?
Yes, very important.
7. Can students have credit score?
Yes, if they use credit responsibly.
8. What hurts score most?
Late payments and defaults.
9. Should I close unused credit cards?
No, keep oldest ones active.
10. How fast can a bad score recover?
Usually 6–12 months with discipline.
Final Conclusion
Your credit score is your financial reputation.
Build it with:
✔ Timely payments
✔ Low credit usage
✔ Smart borrowing
Do this consistently, and in 2026 you’ll enjoy cheaper loans, faster approvals, and complete financial control.
Published on : 4th February
Published by : SMITA
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