How to get a good credit score? – Advisor Forbes INDIA


Credit sentiment, or the perception of buying things on credit, is slowly changing in India. The traditional Indian habit of buying things with ready or available money is changing and many people are now opting for credit-driven choices to meet their day-to-day expenses made through the use of credit cards, small loans as well as longer term loans.

When sanctioning a loan or any credit product, the lender will assess the consumer’s credit rating. Here’s what you need to know about what a credit score is and why you should maintain a good credit score.

What is the credit score?

A credit score is a three-digit number ranging from 300 to 900, with 300 being the lowest and 900 being the highest or best. The score indicates a person’s creditworthiness and lenders use it to make decisions while sanctioning loans or credit cards. The score also reflects the borrower’s financial credibility and likelihood of default.

A person with a low credit score will be considered to have a greater risk of default. This means that the lender will reject a loan application or grant a loan at a higher interest rate.

Currently, there are four credit bureaus in India that provide credit scores to individuals and businesses. They offer credit scores by evaluating a number of metrics such as outstanding debts, repayment history, loan tenure, credit mix, debt to income ratio, etc. Therefore, it is essential to know how to manage credit and shape your credit history. .

How do you know your credit score?

Finding your credit score is easy. The credit report from all four credit bureaus is free, once a year. It’s a quick and easy step that can be done online. You need to fill in your basic details along with your credentials such as PAN card, voter ID number, Aadhaar card among other details. It should also reveal your past use of credit or loans taken out and encountered.

What is a good credit score?

A credit score above 700 is considered good, and anything above 850 is excellent. A healthy credit score is necessary to enjoy a smooth and hassle-free credit experience. A low credit rating can cause difficulty in obtaining a loan.

A credit score varies depending on your credit print. Things like late payments or skipping a monthly loan installment (EMI) can lower your scores. It is advisable to have a good credit rating and maintain it so that whenever you need credit, you can get it quickly.

You can also increase your credit score over time. For this, it is important to have a good credit score and maintain financial discipline to ensure that it improves over time.

Benefits of a good credit score

A good credit score means you’re a responsible borrower and likely to make timely repayments. Let’s look at some benefits of a good credit rating:

  • Qualify for attractive credit card and loan offers: A good credit score means that you are a reliable borrower and therefore lenders will want you as a client. A good credit rating will earn you great benefits on credit cards and loan offers. This can result in loans with relatively lower interest rates, longer loan terms and faster penalties.
  • Qualify for higher limit approval: When you have a good credit rating, you will see that you are offered a higher credit limit based on every time you pay your existing dues in a timely manner. An increased credit limit means you can qualify for loans for larger loans and/or for longer terms. It can also result in faster approvals for higher ceiling loans.
  • Allows better negotiation of loan conditions: A borrower gets good credit score after managing the credit well. Every lender is looking for a borrower less likely to default. With a healthy credit history, the borrower is able to negotiate credit terms up to a certain margin to get a good deal.
  • Indication of financial stability: As it is an indicator of the health of your financial situation, a good credit score can very well reflect your overall financial life cycle. Some insurers offer customers a good credit rating that waives certain document requirements.

Tips to increase your credit score

Many believe that a bad credit rating is a lost opportunity to take advantage of credit options. However, your credit score will change over time based on your credit behavior. Here are some simple tips for getting better credit scores:

  • Avoid the defaults: Your credit behavior is a crucial determinant of your potential financial health, and each of your financial footprints is assessed when calculating a credit score. It is essential that you make all of your EMI payments on time and that you clear dues appropriately.

By avoiding late payments, defaults, short payments, etc., you can improve your credit scores. This will improve your credit history and lenders will see this as a positive sign assuring them that you will handle your future debts with greater responsibility.

  • Keep an eye on your credit utilization ratio: The credit utilization ratio is the ratio of your credit limit to your credit spend. It is the second most important element after credit history. A high ratio will earn you fewer points, which will affect your overall credit score. It is advisable to keep the credit limit under control and secure credit wisely so as not to exceed your limit.
  • Only opt for easily manageable credits: You can come across many quick and easy loan options and great discounts during sales. Many people make large purchases with down payments on their annual bonus amounts. While this may work for many, some people may find it difficult to handle too many loans and miss an IME. This can affect your credit ratings. Therefore, it is wise to avail the credit after careful consideration of one’s need and repayment capacity.
  • Do not delete your old accounts: A long credit life cycle is a positive indicator of your credit management abilities, and lenders pay close attention to your credit history. If you’ve had a credit card with you for a long time, it’s best to keep it and keep making your payments on time. This will reflect well on your credit ratings.

Building a solid payment record with a long-standing credit card can do wonders for your scores. In case you have been irregular with your payments, plan how you can avoid it in the future so that you can eventually improve your credit scores.

  • Do not apply for several loans at the same time: Plan to have a good balance between unsecured loans, such as credit cards and secured loans like home loans, etc. to improve your scores. Focusing on having more secured loans will bode well for your credit scores.
  • Regularly monitor credit reports: Checking your credit scores regularly is a good step to keeping your credit behavior in check. With constant monitoring, you can notice a change in your credit scores and take corrective action. It will also give you an idea of ​​your credit usage and can flag any signs of anomaly such as unknown transactions.


A credit score will be a reference for your credit consumption and a decisive factor for your lenders to evaluate you. Often people don’t know until their loan is rejected. Therefore, do not wait to apply for a loan to check your credit ratings. It is something that is built gradually and can be improved regularly. Monitor your scores from time to time to have full control over your credit performance.


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