What is a Credit Score?

A credit score is a numerical measure of a person’s credit worthiness. It is calculated by respective credit bureaus according to the individuals’ credit history and reports. In India, different credit bureaus issue their own credit score like CRIF Credit Score, CIBIL Credit Score, etc. 

A credit score is essential for availing any form of credit including loans, and also determines the interest rate on loans. The higher the credit score, the easier it is to avail of a loan, and the vice-versa also stands true. Also, the lower the credit score, the higher the rate of interest on loans. In simple words, a credit score is a measure of the device for gauging the repayment abilities of the borrower. 

Let’s delve into the various facets involved to understand ‘What is a Credit Score’’ in-depth. 

The credit score of an individual can differ from organization to organization as it is calculated differently in each bureau. The four different credit scores in India, which are RBI approved, all use separate algorithms to calculate the credit score. 

5 main factors determine creditworthiness. These are Payment History, Credit Utilisation, Credit Mix, Credit Duration, and Outstanding Debts. Also, the number of credit inquiries made is also considered. 

The weightage given to each while calculating the credit score differs from bureau to bureau, as each bureau has its own algorithms and requirements. 

CIBIL the first credit bureau in India, CIBIL, is the most popular in India. CIBIL issues credit scores for individuals and for businesses, it provides risk management tools. 

CIBIL prepares a credit report which contains the payment and credit history of the individual in question. This report is then used to calculate the CIBIL score which can range from 300-900. Anything above a 700 is considered a strong credit score.  

Each year, an individual is entitled to the Full Free Credit Report, which also reflects the credit score or CIBIL score. Through a verification process, one can access this through either the bureau websites or other websites like BankBazaar or PaisaaBazaar. 

Improving your CIBIL score directly affects loan availments, interest rates on loans, etc. 

Paying your dues on time, constant reviewing of credit history, avoiding overspending and taking multiple loans at once, striking a balance between secured and unsecured loans, avoiding multiple credit applications, and discarding credit cards, are few of the many ways in which you can improve your CIBIL score effectively. 

With a little bit of discipline and commitment to following these guidelines, you can boost your CIBIL score in no time!

For building a credit score the first step is to have a credit history and to have a credit history you should have either taken some form of a loan or issued a credit card. 

Even with no credit history you can try and avail of loans like personal loans or auto loans which do not have a hard-and-fast rule for credit history. Along with the availing of loans, obtaining a credit card can help you build your credit score. 

Signing up with ZestMoney’s Pay Later App can help you build your credit score. ZestMoney is designed to help new-to-credit customers. By signing up you are assigned a credit limit which can be used to purchase from their partners. Repaying your purchases on time will help you build your credit score, making you gradually eligible for higher loan amounts or bigger loans like home loans. 

With ZestMoney’s Pay Later App, you can get personal loans even without a CIBIL score. This process of theirs helps you build your CIBIL score quickly and without any hassle. 
What is a credit score, is a complex question that entails various factors and sections. If you are looking to build or boost your credit score, ZestMoney can help you through their simple process and various EMI Plans.