Your credit score is a numerical rating that helps lenders assess your creditworthiness. This rating is calculated based on your credit history and indicates your ability to repay debts.

Here are some of the ways that your credit score can be used -

  1. Loan approval - Lenders use your credit score to determine whether to approve your loan application. A higher credit score indicates that you are a low-risk borrower, making it more likely that your application will be approved.
  2. Interest rates - Your credit score also affects the interest rate you are offered on a loan. A higher credit score can help you qualify for lower interest rates, which can save you money over the life of the loan
  3. Fee Waiver and Charges – Having a higher credit score can also get you a waiver from other fees. Some of these fees could be a processing fee, prepayment fee, etc.
  4. Credit Card Approval – A credit score of 750 and above will help get a credit card application approved easily. Lenders consider credit score as an important benchmark for your credit performance and hence higher the score, the higher the chances of credit card approval.
  5. Credit limits - When you apply for a credit card, your credit score is used to determine your credit limit. A higher credit score can result in a higher credit limit, while a lower score may result in a lower limit.
  6. Insurance premiums - Insurance companies may use your credit score to determine the premiums you pay for auto or home insurance. Studies have shown that people with lower credit scores are more likely to file claims, so insurance companies use credit scores to help determine risk.
  7. Rental applications - Landlords may check your credit score as part of the application process. A higher score can make you a more attractive candidate, while a lower score may make it more difficult to get approved.
  8. Employment – This is a rare practice but some employers might want to look at your credit report before giving the offer letter. The employer will need permission from you to do that. It is an uncommon practice, but it exists.

It's important to maintain a good credit score to increase your chances of getting approved for loans, credit cards, and other financial products, as well as to receive more favorable interest rates and credit terms.

Credit Score Range and Interpretation

A credit score is a numeric between 300-900 given by credit bureaus. A higher credit score is always desirable as it helps in getting loan applications approved. Below is an interpretation of credit scores at different levels.

Credit rating





Need to work on improving the credit score, low creditworthiness, higher interest rates, no lenders



Need to work on improving the score, few lenders, still low creditworthiness, higher interest rates



Better interest rates, most lenders available, and fair creditworthiness can still work to improve



highly creditworthy, low-interest rates, all lenders available, faster loan approval


How to Raise Your Credit Rating

1. Pay your bills on time, especially your EMIs. This is perhaps the most significant aspect in determining your credit score. Your past reveals a lot about your money management skills and credit standing. Your credit score will be higher if you have a history of on-time payments because it demonstrates your capacity to repay your bills.

2. Minimal credit card usage - Maintain modest credit card usage. It is best to keep it at or below 30%. It denotes that you have few financial commitments and will be able to pay off any remaining debts or loans in the future.

3. Do not apply for too many loans - This criterion once more demonstrates that you are not constantly seeking ways to pay for your expenses. Too many applications can lower your credit score since they indicate that you have an excessive number of financial commitments to make.

4. Maintain a healthy balance of debt - You should always maintain a healthy balance of secured and unsecured debts. A high number of unsecured loans on your credit report may indicate that you have excessive debt without any sizable assets to support it. An equilibrium between secured and unsecured loans should be maintained.

5. Verify your credit score and address any disputes - Your credit score may occasionally be low as a result of inaccuracy on your credit report. regular review of your reports, and resolve disputes, if any.

6. Retain good debts on your account - It's a good idea to hold onto the debts that you meticulously paid off. 3. Lenders appreciate seeing loan accounts that have been efficiently paid off.

7. Request a credit limit increase - This can help since your credit utilization ratio decreases as your credit limit increases. You can request an increase in credit limit and demonstrate to the lender elements that affect income, such as an increase in wage or income levels, complete payment of past-due obligations, etc.

8. Loans for property purchases and education - Certain loans, such as home loans and student loans, are regarded as good loans because they are seen as having good credit. Personal credit and loans.


A credit score is used by loan and credit card lenders to determine the eligibility of the applicant. The higher the credit score is, the higher the chances of approval. A credit score is also used by insurance companies, employers, and landlords to assess the applicant’s creditworthiness. It is advisable to maintain a high credit score to avoid loan rejections.

FAQ of How your Credit Score is Used

1:How is my credit score calculated?

Your credit score is calculated using a variety of factors, including your payment history, credit utilization, length of credit history, types of credit used, and new credit inquiries.

2:Who uses my credit score?

Lenders, credit card companies, insurance companies, landlords, and other creditors may use your credit score to determine your creditworthiness.

3:Will checking my credit score hurt my credit?

No, checking your own credit score does not hurt your credit. However, when a lender or creditor checks your credit score, it can have a temporary negative impact on your credit score.

4:How can I improve my credit score?

You can improve your credit score by paying your bills on time, keeping your credit utilization low, maintaining a long credit history, and avoiding opening too many new accounts at once.

5:What is a good credit score?

Credit scores typically range from 300 to 900. A good credit score is generally considered to be 700 or higher.