Your Credit score demystified

Your Credit score demystified

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Image source: Lara Antal © The Balance 2019

Most of us either have a credit card, a loan, have bought something on EMI, or plan to do this in the future. All of these eventually result in building our credit score. But, what is your credit score?

Simply put, your credit score is a number assigned to you that banks, lenders, and other financial companies use to decide how likely you are to be able to pay credit card bills or loans when they lend money to you. 

The next question of course is, how is this score calculated.

To know the answer to this question you must know about the way a loan is processed. If a person takes a loan/credit, the information about this loan is shared with companies called credit bureaus. Credit bureaus like Experian, Equifax, Cibil etc. operate at an international level. These institutions maintain a history of all the credit/loans ever taken by an individual. 

The score is assigned to you on how regularly you pay off credit card bills and loans on time. Paying these in a timely manner improves your score while consistently paying late reduces your score. Anytime you apply for new a credit card or loan, the decision is based on your creditworthiness which in turn is based on your history.

The score usually ranges from 300-850 or 300-900. The scale used varies with different credit bureaus but they all have one thing in common, a higher credit score improves your chances of getting a loan or a new credit card when you need or apply for one. 

It is clear then that its important to maintain a healthy credit score.

Timely payments however are just one of the factors that affect your credit score. Applying for multiple unsecured loans, going over your credit limit often can also negatively impact your credit score. 

While you may be careful with your finances, it is also important to ensure that no one else misuses your credit/ debit card, PAN card, or bank account information – this may end up meaning a loss of money and could significantly reduce your credit score. 

So, the question then is, how do you monitor your credit score regularly and ensure that your credit details are not in the wrong hands?

Here is where ID Fence comes in. ID Fence monitors all your data 24X7, from your credit, debit, and identity cards to your bank and social media accounts and even your mobile number and email ID to ensure that you get alerts in real-time whenever someone may be trying to misuse your information online. It even helps you with the actions you can take to ensure that your information remains safe. With ID Fence you can easily monitor your credit score at the tip of your fingers.

That’s all from us today. Don’t forget to subscribe to our blog to get information about data breaches, daily tips to keep your personal information secure, and much more.

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