What Factors determine your credit score

1. 5 FACTORS THAT AFFECT YOUR CREDIT SCORE

2. What factors that determine your credit score? If you have ever used a credit card or applied for a loan, you sure know what a credit score means, both – to you and to the lender! A credit score is a three-digit number which gives a bank or a lender a sense of the consumer's or business's creditworthiness i.e. whether the borrower has been repaying the dues regularly or not. credit report is a summary of your credit history. If the credit score is good, then the lender understands that the borrower has used loans or credit cards in the past and has repaid all the dues properly and regularly. This makes the lender comfortable to approve the application for a loan or credit card. In India, the credit score ranges between 300–900. 300 is the lowest score indicating riskier customer for a bank and 900 is the highest score indicating the best possible customer for a bank. A score above 700 is generally considered good.

3. There are five factors that affect your credit score Payment History Credit Mix Length of Credit History Credit Utilization Ratio Outstanding debt

4. • Payment History The most important factor while calculating your credit score is payment history. It is important to pay your credit card bills and loan EMIs on time every month. Any missed or overdue payments, hampers your score and suggests that you are not consistent with repaying credit. • Credit Utilization Ratio The credit utilization ratio is the amount of credit used in proportion to your credit limit. It tells about your total credit limit and how much you’ve used till now. Ideally, this ratio should remain within 30% of your credit limit. For example, if your credit card limit is 1 lakh, you should spend under a cap of 30,000/- The less credit you use, the better will be your score.

5. • Outstanding debt This is the amount you owe to the lender. You should always make sure to clear off your outstanding debts. When you have unpaid dues reflected on your credit report, it has a significant contribution to your credit score. • Length of Credit History This is counted from the date of your first credit sanctioned. The older your credit age, the better it will be for your score. It is often advised to own a credit card right at the beginning of your life when you are financially more secure and able to repay on time as this will build a solid credit history and will eventually help you bag a loan later in your life when you need it.

6. • Credit Mix Your credit account should be a mix of secured (auto loans, home loans etc) and unsecured loans. (Credit card) It is important to maintain a healthy balance of secured and unsecured loans.

7. It is important to check your Credit score from time to time. You can get your online credit score here https://cir.crifhighmark.com Follow CRIF India on : /CRIF INDIA