How your Credit Score is used

In assessing your loan or credit card application, a CIBIL score is a significant aspect that your lenders and credit card issuers look at. A credit score usually ranges from 300 to 900, the lowest being 300 and the highest being 900. The higher the ranking, the greater the chances of your loan approval with the most favorable conditions, including lower interest rates and potentially lower fees, which works as a first impression for your lender. The lending decision depends entirely on your credit score. If you have a good credit score above 750, then if you have maintained a good credit history and relationship with the lender, you are entitled to get quick approval on your credit applications, along with the low-interest rate as well as pre-approved deals in some situations. Your good credit score tells the lender how well you have successfully handled your credit commitments in the past and are likely to continue to do so in the future. Credit scores are used by many organizations these days to assess your creditworthiness. It allows them to quickly make choices about whether or not to lend you.


A credit score is largely based on the details available from the credit bureaus in your credit report. Your credit score is used by lenders, such as Banks and NBFCs, to determine the potential risk presented by lending money to borrowers and to reduce losses due to bad debt. Let’s look at some of the places where attention is given to your credit score.

  • Lenders and Credit Card Issuers: One of the important items that are reviewed by your lender and credit card issuers before authorizing any sort of credit is your credit score. By having a credit report from the credit bureaus to analyze your creditworthiness, the lender takes out your credit details. You would be entitled to obtain preferential rates from lenders for the loan interest rate if you have a good credit score (750 and above). A good credit score ensures a lender that your finances are well handled and that you have good repayment potential.
  • Employers: Until hiring you, employers also review your credit score. It must be remembered, however, that you will have to authorize employers to take out your credit report.
  • Debt Collectors: To get information that will help them recover the debt from you, debt collectors review your credit score. This includes your existing address and information about the employer. On your credit report, they will also view other accounts to estimate whether or not you can pay for the collection.