What Is A Good Credit Score?

Credit score is a three digit summary of credit worthiness. This score ranges from 300 to 900 with 900 being the best score. A Credit Score of 750 and above could mean easy sanctioning of loans. Banks and NBFCs easily sanction loans on having a credit score of 750 and above.

Factors which affect credit score:

Payment History: Credit history is very important when it comes to a credit score. Around 35% weightage is assigned to payment history. A lender gets an idea on how consistent you have been with repayments.

Amount to be repaid: This is the loan amount due and credit card outstanding. Around 30% weightage is assigned. This is the loan amounts availed from banks and NBFCs.

Credit Mix: This is the amount of secured and unsecured credit availed. A personal loan or credit card is a prime example of unsecured loans. These loans are not secured against collateral. Home loans and car loans are an example of secured loans. These loans are secured against a house or car. Around 10% weightage is assigned to credit mix.

Length of credit history: This is the duration of active credit accounts. It’s wise not to close old credit cards as this increases length of credit history. Around 15% weightage is assigned to length of credit history.

New Accounts: Availing multiple credit cards and taking many loans lowers credit score. Whenever you apply for credit, banks and financial institutions check credit history and credit score. These are hard enquiries and lower credit score. Around 5% weightage is assigned to new accounts.

To know more click on the link: What Is A Good Credit Score?