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2 mins Read | 2 Years Ago

Why a good credit score matters and how can one improve it?


Managing your money is like a balancing act. You have to earn a regular income, manage your expenses and save and invest for the future. To realise your dreams, you can take loans. Your ability to service those loans through regular repayment, creates your track record. It allows banks to assess your ability to repay a loan. That is captured by a good credit score.

What is a credit score?

A credit score is a three-digit number between 300 and 900 that tells a lender how creditworthy or likely you are to repay a borrowed sum. The higher your credit score, the better your chances of getting a loan or even a Credit Card. If you maintain a score of 750 or above, it is considered to be a good credit score.

Here are the advantages of a good credit score:

  • Easy to avail a loan or a Credit Card
  • Quicker processing of loans
  • Favourable interest rates
  • Pre-approved loans are a possibility
  • Longer tenure on loans
  • Higher credit limit on Credit Cards
  • Better offers and discounts.

What if your credit score is low?

Having a low credit score can interfere with your chances of getting a loan approved. However, if your score is below 750, don’t fret too much. No matter what your score, there are ways to improve. Four factors contribute to your credit score:

  • Payment history
  • Amount of credit taken
  • Type of credit
  • Duration of credit.

By focusing on these factors, you can improve your credit score, over time.

Tips to improve your credit score:

           1. Make timely payments

Missed payments can lower your credit score. From EMIs to Credit Card dues outstanding, make sure to pay your bills on time to improve your score.2.

          2.  Keep tabs on credit utilisation

It is the ratio of credit you have outstanding, to the total credit limit available to you. Usually, it’s best to keep your credit utilisation ratio below 30%.

          3.  Don’t take too many loans

Having too much debt can make it challenging to keep track of repayments and make them on time. It may be a good idea to pay off old loans first, before taking on new ones to avoid a debt trap. Clearing debt helps boost your credit score.

            4. Diversify your credit

Just like your investments, diversifying your credit is a smart move to improve your score. Have a combination of secured and unsecured, as well as short-term and long-term loans. For instance, if you have one Credit Card and one Home Loan and you make payments on time, it will satisfy credit rating agencies of your ability, to pay off debts.

           5. Check your credit report

You need to have a clean credit record as far as possible. Do check your credit report from time to time, for errors in your credit history.


Having a healthy credit score is essential to get loans and at the best rates possible. Follow the tips above to boost your credit score. If you want to check your credit score, you can do it with ICICI Bank, by clicking here.

Terms and Conditions apply.

For disclaimer, Click Here.

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