Chapter 2 of 4
Your credit score
What the CIBIL number means, the five habits that move it, and how to check and correct your report for free.
My Money & MeUpdated Oct 18, 20265 min
On this page · Chapters in this module
Every loan and credit card you have ever held is written down in a file with your name on it. Lenders read that file before they say yes, and the three-digit summary at the top, your credit score, decides whether you get the loan and at what rate. The good news is that the score is built from a handful of habits you control.
What the number means
In India four bureaus keep credit files: TransUnion CIBIL, Experian, Equifax and CRIF High Mark. CIBIL is the one most lenders quote, so "CIBIL score" has become shorthand for all of them. Scores run from 300 to 900.
| CIBIL score | What lenders see |
|---|---|
| 750 to 900 | Strong. Best rates, fast approvals, higher card limits. |
| 700 to 749 | Good. Most loans approved; the rate may be slightly higher. |
| 650 to 699 | Fair. Approval possible, often at a higher rate or with conditions. |
| Below 650 | Weak. Many lenders decline or ask for a guarantor or collateral. |
| NA or NH | No history. You have never borrowed, so there is nothing to score. |
"No history" is not a bad score, but it slows down a first home loan. A secured credit card against a small FD, or a small loan repaid on time, builds a file within a year.
What moves the score
- Payment history, the biggest factor. One EMI or card bill paid 30 days late can knock off 50 to 100 points and stays on the report for years.
- Credit utilisationOutstanding card balance divided by total card limit, as a percentage.: the share of your total card limit you are using. Keep it under 30%. A ₹1 lakh limit with ₹80,000 outstanding looks like stress even if you pay in full.
- Age of credit: older accounts help. Do not close your oldest card just because you use a newer one.
- Credit mix: a secured loan such as a home or car loan alongside unsecured credit such as a card scores better than only unsecured credit.
- Hard enquiries: every loan or card application is logged. Several within a few months look like desperation. Apply only where you are likely to be approved.
Check it for free and fix the mistakes
Each bureau must give you one free full credit report a year. Check all four, because lenders report to each separately and the errors differ. Look for loans you never took, a closed loan still showing as open, or a wrong "SettledA loan closed by paying less than the full amount owed; it stays on the report as a negative mark." tag. Raise a dispute on the bureau's website; the bureau and the lender have 30 days to respond. Checking your own score is a soft enquiry and does not affect it.
A note on guarantors. When you guarantee a friend's or relative's loan, it appears on your report, and if they miss payments your score falls with theirs. Say yes only if you could comfortably repay the whole loan yourself.
Key takeaways
- 750 and above gets the best rates.
- Pay every bill on time; one 30-day late mark costs the most.
- Keep card utilisation under 30% of the limit.
- Check all four bureau reports once a year and dispute errors.
Glossary
- Credit bureau
- A company licensed by RBI to collect your borrowing history from lenders and turn it into a report and a score.
- Credit utilisation
- Outstanding card balance divided by total card limit, as a percentage.
- Hard enquiry
- A lender pulling your report because you applied for credit; it is logged and can lower the score slightly.
- Settled
- A loan closed by paying less than the full amount owed; it stays on the report as a negative mark.
Check your understanding
1. Which single factor affects your credit score the most?
2. Your card limit is ₹2 lakh. To keep utilisation healthy, your outstanding balance should stay under:
3. Checking your own credit score: