What Factors Impact Your Credit Score?

There are several factors that can affect your credit scores, including:

1. Payment history : Your payment history is really important for your credit score because it shows if you’ve paid your bills on time. If you miss payments or don’t pay at all, it can lower your score.

2. Credit utilization ratio: Your credit utilization ratio is how much of your available credit you’re using. If you use too much of your credit, it can lower your credit score because it looks like you’re depending too much on borrowing money.

3. Credit history length: Credit history length is how long you’ve had credit accounts. Generally, a longer credit history is good for your credit scores because it shows you have experience managing credit responsibly.

4. Types of credit: The different kinds of credit you have, like credit cards, house loans, and car loans, can impact your credit score. Having a variety of credit types can be good for your score because it shows you can manage different kinds of borrowing responsibly.

5. Credit inquiries: When you apply for credit, lenders check your credit report—these are called hard inquiries. If you have too many of these checks in a short time, it can lower your credit score.

5. Credit account balances: The amount you owe on credit cards and loans can impact your credit scores. Keeping these balances low compared to your credit limits can help boost your scores.

6. Time: To keep a good credit score, always pay your bills on time, don’t use too much of your available credit, and avoid applying for lots of new credit quickly.

A credit score is like a report card for your money habits. It’s a number that shows how well you handle borrowed money. If you pay bills on time and manage credit responsibly, your score goes up. But if you miss payments or have lots of debt, it goes down. Lenders use this score to decide if they should lend you money, like for a loan or credit card. A high score means you’re trustworthy with money, while a low score might make it harder to borrow or get good deals.

Scores above 670 on the 300 to 850 scale are generally good. A credit score of 670+ is good in India, indicating you’re reliable with loans. The common score is CIBIL, ranging from 300-900; 750+ is considered good. Banks use these to decide on loans or credit cards. Good scores mean better terms and lower rates; low scores mean costlier or harder borrowing.