From lenders they collect the data of individuals who have taken any of credit compiling them in the form of a credit report based on which they calculate the credit score using their own proprietary algorithm.Ĭredit scores used to be an alien topic in India but not anymore. In India the credit score of individuals is the domain of 4 credit bureaus – Equifax, CIBIL™, Experian™ and CRIF High Mark™. So, high credit score indicates that you have managed your credit better and this increases the chance of your loan or credit card approved and get better offers in the future. The credit bureaus have all the information on you based on your credit history and provide a background about a potential borrower to the lender (Bank or NBFC). This lack of data also explains why loans were predominantly given to existing account holders or would take a lot of time to approve loans for new customers as it will take a lot of time to verify the given documents.Ī person’s credit score is that friend vouching for another person. To put it in layman’s terms, banks were having the same problem in lending money because of the lack of parameters to make a lending decision. The only way you will think of owing money to a stranger if you know the person or one you know vouches for them. *These figures are calculated by using the information in our databaseīefore we explore this section answer this simple question - “Will you lend money to a complete stranger?” Most of you will be nodding your head saying “No”. Percentage wise Credit Score Distribution in India*: Credit Score Range Just as a student will get into a good college if his score is good, a person with good credit score will get better offers when they apply for any type of credit. Now the average of the students score is what colleges look at before deciding on giving admission.Ĭredit score is exactly the same for a person which is a 3-digit number which is a got based on how you managed your past loans and credit cards dues. Let’s make it even simpler, consider a class 12th student who has 5 subjects, in which he needs to get good scores to get into a good college. A person's credit score ranges from 300 to 900, and the higher the score, the more financially trustworthy a person is considered to be”. Lenders use credit scores to evaluate the probability that an individual will repay his or her debts. The popular definition of a credit score is as such “A credit score is a statistical number that evaluates a consumer's creditworthiness and is based on credit history.
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