A credit score is a numerical representation of an individual’s creditworthiness. It is used by lenders and financial institutions to determine the likelihood that a person will repay a loan on time. A credit score is based on an individual’s credit history, which includes information about their credit accounts, payment history, and outstanding debt.
The credit score is calculated by using a mathematical algorithm that takes into account a variety of factors, such as the number and type of credit accounts, the amount of debt, the length of credit history, and payment history. A high credit score indicates that a person is a low credit risk and is likely to repay a loan on time, while a low credit score suggests that a person is a higher credit risk and may be less likely to repay a loan.
In India, the credit score is commonly referred to as a CIBIL score, which is generated by the Credit Information Bureau (India) Limited (CIBIL). The CIBIL score ranges from 300 to 900, with a score of 750 or above considered to be good.
It is important to maintain a good credit score as it can impact your ability to get a loan, credit card, or insurance, as well as the interest rates and other terms you are offered.