This credit data is submitted by lenders to credit reporting agencies like CIBIL (Credit Information Bureau (India) Limited) on a regular basis. An individual’s credit score provides a credit institution with an indication of the probability of default. These scores play a critical role in the loan approval process.

The score ranges from 300 to 900. The closer the score is to 900, the more favourably is the loan application viewed by a credit institution. The scores for an individual may vary across different CICs as each company operates independently. Individuals looking to improve upon their scores should keep in mind some important tip

Avoid late payments or defaults - late payments or missing payments on existing loans / credit cards should be avoided as regular payments helps reduce the impact of defaults in the past.

Keeping credit limits low - most credit card companies lure people to pay only the ‘minimum amount due’ on their cards, but this can be dangerous for credit scores.

Higher number of credit cards and personal loans - It is easy to give in to the ‘free for life’ credit card over the phone.

“Credit Hungry” - Making applications for multiple loans at the same time indicates a “credit hungry” behaviour, which can impact your credit scores.

Maintaining discipline with repayment dates, amounts and commitments will all help in the cause for a good score. All (or any) of the tips given above will only help in dramatic improvement of your scores over time.