Credit Score: Definition, Credit Bureaus, Factors affecting and improving

A credit score is a number given to a customer which indicates their ability to repay debt. The possible Credit score range is 300-900. The higher the score, a customer is identified as more creditworthy. Usually, a credit score of 750 and above is considered a good score. This helps you get a bank loan or any other credit. It can be calculated based on various factors. We will be discussing the major points related to Credit scores in this article.

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Four major Credit Bureaus

In India, there are four major RBI approved credit bureaus that deal with credit reports. They issue their own credit scores.


Credit Information Bureau (India) Limited (CIBIL), is the first credit bureau established in India. It has the license granted by the RBI and tracks the repayment of loans and credit cards for both individuals and companies.


CRIF is also one of the credit bureaus in India. It is licensed by RBI and provides credit reports as CIBIL. CRIF is involved with two types of credit reports, Personal (Individual) and Business Credit scores (for commercial entities). At the time of the lending process, lenders can access the customer’s credit score to check their credit history and creditworthiness.


Experian also records the customer’s credit history and repayment information. Apart from that it also shows the inquiries made by lenders for any loan application submitted by the customer.


Unlike the other credit bureaus, Equifax’s credit score is not used by lenders. It is for customer awareness or education only. This helps the customer to learn and improve their score as per the report findings.

Nowadays, it’s easy to get a credit score and evaluate all your credits. There are various bank apps and payment apps that give free access to credit reports. It is always recommended to check the credit report which can help you in:

  • Be aware of your credit position: By checking credit reports regularly, you can know your creditworthiness or ability to get a new loan.
  • Keep it under control: If there is anything that is impacting your score, it can be avoided. For example, if you are applying for credits often, it will impact your credit score. Whenever lenders do a credit check, it’s considered a hard inquiry. By reviewing credit reports, you can plan and avoid this type of impact.
  • Identify Error: You can detect any incorrect, incomplete, or outdated information.
  • Avoid identity theft: If you detect any unknown credit information under your credit report, you should directly report it.

Factors affecting Credit Score

Now we will go through the points which are responsible for credit score changes:

  • Payment History: Payment history has a high impact on one’s credit score. It shows if the loan EMIs or credit card payments are paid on time or not. If a customer pays their bill on time, it will positively impact their score.
  • Credit Utilization: The total amount of credit taken vs the amount of credit available for a person is called credit utilization. After payment history, credit utilization has the most impact on the credit score. With more credit cards, it’s easier to manage credit utilization.
  • Length of credit history: This is nothing but the age of the credit history of a person. The longer the length of credit history, the lower the risk is for a lender to provide credit.
  • Credit Mix: A combination of regular loan EMI and credit card bill payment gives the lender more confidence in the customer.
  • Secured vs Unsecured loan: A credit history with more secured loans than an unsecured loan will be preferable. The unsecured loan category includes personal loans, credit cards, student loans, etc., as there is no collateral or security against the loan.

Also Read: Credit Card: Definition, Application, Use, and Advantages

How to Improve Credit Score

Let’s discuss the ways of improving credit score

  • Reviewing credit reports regularly.
  • Pay as much as a credit to lower credit utilization.
  • Pay EMI or credit card bills before the due date.
  • Limit credit card application, this will reduce the hard inquiry on your credit report
  • Keep the old account open for long credit history

FAQ on Credit Score

What does it mean to have a low credit score?

Customers with low credit scores are not eligible for most bank loans and credit cards. A credit score of 750 or above is suitable to get credit from lenders.

How can I check my CIBIL score online with a PAN card?

There are various bank apps, payment apps, or websites that provide free credit reports. Websites like CIBIL, Paisabazaar, Bankbazaar, India lends, etc gives the option to check credit score.

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