Which Factors Make Up My Credit Score?

Understanding the influence of each factor that contributes to your credit score is essential for ensuring its stability and strength.

What is a credit score?

Imagine your credit score as your financial superpower rating! It's like a three-digit badge that tells banks and lenders how much they can trust you with their treasure chest of money. The higher your score, the mightier your financial prowess, unlocking doors to better loans and magical credit card offers. So, think of it as your secret weapon in the world of finance, where you're the superhero of your own creditworthiness adventure!

Note: The above figures can vary slightly based on each credit bureau

Where can I check my credit score?

Four credit scoring agencies, also known as credit bureaus, provide credit scores: TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. Each bureau employs its unique formulas and algorithms to compute scores for individuals, resulting in variations among the scores from different bureaus.

Although you can obtain your score from each bureau individually, a faster and more convenient method is to download the OneScore app, allowing you to access your CIBIL and Experian scores in less than three minutes.

What do I do if I don’t have a score?

It's essential to begin building your credit score as soon as possible, as it enhances your prospects for securing loans and credit cards in the future. The quickest and most straightforward method to initiate building your credit score from scratch is by establishing a Fixed Deposit (FD) and acquiring a OneCard. This unique card is the sole FD-backed card that provides a credit limit of 100% of your FD amount. Moreover, you can earn interest on your FD at a rate of 6.05% and above per annum. Click on the link provided to obtain your FD-backed OneCard!

What are the factors affecting my credit score?

There are five factors that affect your credit score -

1) Payment History

The most important factor while calculating your credit score is payment history. Any missed payment, be it big or small, impacts your credit score negatively. Not only does your score drop, but lenders also take it as a sign of a possible default behavior from you in the future. So maintain a good score, and ensure you make timely payments on your loans and credit cards.

2) Credit Utilization

Credit utilization stands for the total amount of your credit limit (all credit cards put together) that you have spent in a month, divided by the combined credit limit you have on all your cards.

For e.g., If you have a total credit limit of Rs 1,00,000 and used Rs 50,000 of your credit limit. Then, your credit utilization will be 50%. If you are overusing your credit limit, lenders think of you as someone who spends more money than they can manage. Hence, try not to use your entire credit limit.

3) Length of Credit History

While calculating your credit score, bureaus don’t consider your age, but they do consider how many years it has been since the first time you took a loan or a credit card and when you took your newest loan or credit card. They also consider the average age of all your credit accounts (loans + cards) combined. The older the age of your first credit account, the better it is.

4) Mix of Credit

A mix of credit refers to the type of accounts that show up on your credit report. There are two types of credit accounts - installment-based (loans) and revolving (credit cards). A mix of both these types of credit accounts shows the lender your ability to manage various kinds of credit products and hence are a good customer to lend to.

5) New Credit

The number of new credit accounts you have opened in the recent past, along with the credit products you have applied for currently, make up your new credit.

Think of your credit score as your financial wizard level! Every time you go on a quest for a loan or credit card, lenders cast a magical spell called a hard inquiry to summon your credit report and gauge your financial prowess. But beware! Too many spells in a short time can put a dent in your wizarding reputation (aka your credit score). So, keep your wizardry above 700 to unlock the treasure chest of financial opportunities! And if your wizardry needs a boost, fear not! Just whip out your OneScore app, brew some score-improving potions, and summon the mighty FD-backed OneCard to level up your wizarding game. Adventure awaits in the realm of financial magic!

Edited by: Ananya Gupta