Credit Score Basics: What Lenders Actually Look At

Your credit score — the three-digit number between 300 and 900 that bureaus like CIBIL, Experian and CRIF assign you — is the single most important input a lender looks at before approving a loan. It condenses years of borrowing behaviour into one glance. Understand what feeds it, and you can steer it deliberately instead of discovering it at the worst moment: mid-application.

The five factors behind your score

While each bureau weighs things slightly differently, the broad picture looks like this:

• Payment history (~35%) — the single heaviest factor. Even one missed EMI reported to a bureau can dent your score for months. Consistency beats everything else.
• Credit utilisation (~30%) — how much of your available limit you actually use. Using ₹90,000 of a ₹1,00,000 card limit signals stress even if you pay in full. Staying under 30% utilisation is the sweet spot.
• Length of credit history (~15%) — older accounts demonstrate reliability. That decade-old card you never use is quietly doing work for you.
• Credit mix (~10%) — a healthy blend of secured and unsecured credit scores better than ten credit cards alone.
• New enquiries (~10%) — every hard pull when you apply for fresh credit dings your score slightly. Five applications in a month reads as desperation.

Why lenders care so much about 750+

Lenders price risk. A high score tells them that lending to you is boring — and boring gets rewarded:

• 750–900: best advertised rates, faster approvals, higher sanctioned amounts, and leverage to negotiate processing fees.
• 700–749: approved comfortably, but often at rates 0.25–0.75% above the headline number.
• 650–699: approval possible but selective; expect stricter documentation or lower amounts.
• Below 650: most unsecured products are off the table until the score recovers — secured loans against collateral become the practical route.

Habits that reliably raise your score

• Automate every EMI and full card payment. On-time history compounds like interest does.
• Keep card utilisation under 30% — request a limit increase rather than spending closer to the ceiling.
• Space out applications by at least 3–6 months when you're shopping for loans.
• Pull your report once a year from all bureaus (it's free) and dispute errors — mismatched entries are surprisingly common.
• Don't close old cards in a spring-cleaning mood. Keep them alive with one small swipe per quarter.

Common myths worth dropping

"Checking my own score hurts it" — false; only lender-initiated hard pulls count. "A higher income raises my score" — income affects approval, not the score itself. "Settling a loan for less clears the record" — a settled status stays flagged and reads worse than closed-paid. And "no credit history means a good score" — no history simply means no data, which many lenders treat as its own risk category.