What is a Credit Score?

A credit score is an important parameter to evaluate the creditworthiness of the applicant. It helps the lenders to assess the credit risk associated with the applicant. The higher the credit score, the better your chances of securing loans at lower interest rates.

What is an ideal credit score for availing loans?

Applicants with a credit score of 750 and above usually have higher chances of loan approval at relatively better terms. Try to improve your credit score if it’s low before applying for a loan.

What are the Factors Affecting Your Credit Score?

• Repayment History: Making timely repayments improves your credit health and in turn your credit score, thereby making it easier for you to get loans and cards in future.
• Credit Utilisation Ratio: Credit utilisation ratio is the percentage of available credit you are currently using. An applicant with a low credit utilisation ratio reflects a healthy credit behaviour and hence a healthy credit score.
• Credit Age: Credit age shows the period for which the bureau has your credit record. It helps them assess your repayment behaviour and thus the risk associated in approving your credit application.
• Credit Mix: A credit mix shows different credit accounts in your credit profile. It helps lenders assess how well are you managing multiple credit products, thereby reflecting your overall financial discipline.
• New Enquiries: Multiple enquiries (hard enquiries) in a short span indicate financial stress and can lower your credit score. Avoid applying for multiple credit options in a short span.

What is the importance of a good credit score?

A good credit score reflects your creditworthiness and helps you improve your approval chances and avail loans at relatively lower interest rates and on better terms.

How Does a Credit Score Work?

Lenders assess the creditworthiness of the applicant based on the credit score.

• Credit bureaus collect the financial information of applicants and generate a credit report that determines their credit score.
• Lenders fetch the applicant’s credit report from the credit bureaus while assessing their loan application.
• The applications for loans and cards are approved depending on the credit score and other factors.
• Applicants with a higher credit score have higher chances of approval.

Credit Scores by Different Credit Bureaus

In India, credit score is generated by 4 credit bureaus, namely, CIBIL, Experian, Equifax and CRIF High Mark. Every bureau has its own calculation formula to generate the score of an individual.

Category	Credit Score Range
	TransUnion CIBIL	Experian	Equifax	CRIF High Mark
Excellent	801 – 900	826 – 900	751 – 900	751 – 900
Very Good	761 – 800	776 – 825	701 – 750	676 – 750
Good	701 – 760	701 – 775	601 – 700	601 – 675
Average	601 – 700	601 – 700	526 – 600	586 – 600
Poor	300 – 600	300 – 600	300 – 525	301 – 585

 

Note: These credit score ranges are generally accepted in the industry and are based on Paisabazaar’s own criteria.

How to Maintain a Good Credit Score?

You can maintain a good credit score by following the tips mentioned below:

• Make timely repayments.
• Keep your credit utilisation low.
• Avoid multiple loan applications in a short span.
• Maintain a healthy credit mix.

RBI Guidelines on Credit Score from April 1, 2026

As of 1st April 2026, RBI has modified certain rules for the credit score.

• Weekly credit score updates – The credit score will be updated every week instead of the monthly cycle. Thus, your repayments or defaults will be reflected faster, improving credit visibility for both the borrower and the lender. This has made credit monitoring easier, facilitating early warning signals to the borrowers.

Transparency – RBI has instructed the lenders to specify the actual reason for the rejection of loan and credit card applications, and that the same should be reflected in the credit report.