Credit scores — the gatekeeper of borrowing
In this chapter: How CIBIL, Experian, Equifax, and CRIF compute your score · The five components: history, utilisation, length, mix, enquiries · Reading a credit report; spotting and disputing errors · How long a default stays on your record, and what you can do
A credit score (300-900 in India) is a three-digit number that lenders use to predict whether you will repay. It is computed by four bureaus (CIBIL/TransUnion, Experian, Equifax, CRIF) from your credit history reported by every bank, NBFC, and credit-card issuer. A score above 750 unlocks the best loan rates; below 650 either gets rejected or offered at punitive rates.
The five components and their rough weights: payment history (35%) — never miss a due date; credit utilisation (30%) — keep card balances below 30% of limit; length of credit history (15%) — older accounts help; credit mix (10%) — secured + unsecured combo is best; new enquiries (10%) — too many applications in 6 months hurt. A pull where you check your own score is a "soft enquiry" and does NOT affect your score; only lender-initiated "hard" enquiries do. Get one free report per bureau per year — read it for errors at least annually.
A genuine default (NPA, settled-not-paid) stays on your record for 7 years from the date of last activity. A "settled" status (you paid less than full) is much worse than "closed" (you paid in full); negotiate hard for closed status if settling. Disputed errors must be resolved by the bureau within 30 days under RBI/CIBIL norms — most people never check, but a single wrongly-reported default can cost you a 100-point hit. The first move whenever your score falls unexpectedly is to read the actual report.