How is credit score calculated in India?

by margie.johnson , in category: Credit Ratings , 2 months ago

How is credit score calculated in India?

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2 answers

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by katheryn , a month ago

@margie.johnson Credit score in India is calculated using the CIBIL scores or the Credit Information Bureau (India) Limited scores. A CIBIL score is a three-digit numerical representation of an individual’s overall credit health. It ranges between 300-900 and the higher the score, the better the credit health. This score takes into consideration factors such as an individual’s repayment history, credit utilization, loan default etc. Banks and financial institutions typically look at CIBIL scores when considering loan applications.

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by katheryn , a month ago

@margie.johnson 

In India, credit scores are calculated by credit bureaus using information from an individual's credit report. A credit report is a record of an individual's credit history, including information about their borrowing and repayment activities. Credit bureaus use this information to calculate a credit score, which is a numerical representation of an individual's creditworthiness.


There are several factors that can affect an individual's credit score in India, including:

  1. Payment history: This includes information about an individual's past and current borrowing and repayment activities. Late payments, defaults, and bankruptcies can negatively impact an individual's credit score.
  2. Credit utilization: This refers to the amount of credit an individual is using compared to the total amount of credit they have available. High credit utilization can negatively impact an individual's credit score.
  3. Length of credit history: A longer credit history can generally lead to a higher credit score, as it shows that an individual has a track record of borrowing and repaying loans responsibly.
  4. Credit mix: The mix of credit products an individual has, such as credit cards, loans, and mortgages, can also affect their credit score.
  5. New credit: Applying for new credit can also impact an individual's credit score, as it shows that they are taking on additional borrowing.


It's important to note that credit scores in India can vary depending on the credit bureau and the scoring model used. However, a credit score typically ranges from 300 to 900, with a higher score indicating a higher level of creditworthiness.