What Is Credit Score? Know How Your CIBIL Rating Is Determined & Factors Affecting It

How is the credit score calculated: Credit score plays a vital role in getting loans approved from banks. Those who have a bad credit score find it difficult to get loans approved. The credit score ranges from 300 to 900. Generally, a score of a minimum of 750 is considered to be excellent. Those who have a higher credit score can avail loans easily. But do you know how the credit score is determined? 

Credit Bureau

• Many credit bureaus decide the credit score of the customers.
• Major credit bureaus include Trans Union CIBIL, Experian, CRIF High Mark, and Equifax.

What do the credit bureaus do?

• They keep a record of your paid bills and loan installments every month.
• They calculate your credit score on the basis of few years of record.

Credit Utilization Ratio

• Credit Utilization Ratio (CUR) means how much you use a credit card in a month you are of the available credit limit.
• The CUR has a great impact on the credit score. Your CUR depends on how much you use your credit card.
• The more you use your credit card, the higher will be your CUR.

Old Credit Card

• Your loan is very old or using a credit card for many years is considered good for your credit score.
• In fact, it shows that you use your loan properly and you pay their installments on time.

Do not apply again and again

• Do not apply repeatedly for loans or credit cards.
• This is not considered good in terms of credit score. This brings down the credit score.

Pay the loan on time

• Pay your loan EMI regularly and don't miss it.
• If you make a late payment or default once, it will result in
• Credit score and can drop up to 100 points.