Have you ever tried checking your Credit score? Just like that? Well I did, and I was told it is 850. This is good, and for me of just pure academic interest.

However, a good credit score (read: anything over 750) is good and will help you get loans cheaper, clear security checks, visa, job change,…and lack of a good score can seriously damage your financial life.

What are the factors that the credit rating agencies consider while rating you? (remember CIBIL is here to help the LENDER, not you)…

1. Payment History: whether you pay your bills on time, every time. Do you negotiate on delayed payment charges, do you pay in full, do you make part payments….all these factors get into this.
2. Amount owed: how much credit do you use, how much are you entitled to and how much have you availed. Your debt-to-credit ratio. Shows how much debt you can take, and how much have you repaid.
3. Credit usage history: sounds stupid? well this is awesome proof that rating agencies act like marketing agencies – so a person who has used a credit card for say 10 years and always paying on time, is rated better than a person who does not have a credit card history. So the advice to young people is to get yourself a credit card make sure that all your expenses are made through that card, and that the card is settled off in time. Never, ever delay a card payment.
4. How much credit are you using: your mix of credit card loan, home loan, car loan, personal loan, -of course whether you are repaying on time (point 1). Again looks like a business prospecting tool, and it is.
5. Credit inquiries: If you apply for many credit cards and they keep asking the credit rating agency for data, that is also not taken as a good sign.

What happens if you do not have a good score? One hears of job loss, visa rejection, house owner refusing to give a house on rent. If I were a person about to get married, I will not mind if my prospective bride asked for my Credit score. Makes sense.