Your credit score is a very important financial number. It is a three-digit number that predicts the likelihood that you will make your loan and credit card payments on time, based on your previous credit and payment behavior.
Your credit score is a very important financial number. It is a three-digit number that predicts the likelihood that you will make your loan and credit card payments on time, based on your previous credit and payment behavior.
The number ranges from 300 to 900. A low score indicates a higher risk, whereas a higher score indicates a lower risk.
Credit Score wise risk classification:
| Score Range | Risk Group |
|---|---|
| 300 – 540 | Very High Risk |
| 541 – 650 | High Risk |
| 651 – 710 | Medium Risk |
| 711 – 745 | Low Risk |
| 746 – 900 | Very Low Risk |
Your credit score is a critical indicator of your financial health, reflecting your ability to manage credit responsibly. It is used by banks, lenders, and financial institutions to evaluate your creditworthiness when you apply for loans, credit cards, or other financial products. A high credit score can help you secure loans at better interest rates, access higher credit limits, and improve your chances of approval for mortgages, car loans, or even rental agreements.
Beyond loans, your credit score can also be a deciding factor in non-financial matters, such as securing a job in certain industries, qualifying for utility services without a deposit, or negotiating better terms with landlords. The Credit Score will help financial institutions make better-informed decisions, process credit card and loan applications faster and provide preferential benefits for those with high scores.
The Credit Score is calculated using information from various sources, like banks, finance companies and telecom companies.
Your Credit Score is dynamic, and changes according to your credit and payment behavior. Missing or delaying a payment beyond the due date, frequently utilizing all your credit card limits, or taking on additional loans or credit cards may lower your Score.
However, reducing the number of credit cards, consistently reducing outstanding balances, and making payments on or before the due date will improve your Credit Score.