A credit score is a numerical value that reflects a person's creditworthiness, which is calculated based on their credit history. It is a measure of how likely an individual is to repay their debts on time, and is used by lenders, such as banks, credit card companies, and other financial institutions, to evaluate the risk of lending money to an individual.
A high credit score indicates that a person is a reliable borrower and is likely to repay their debts on time, making them more attractive to lenders. A low credit score, on the other hand, suggests that a person may be a risky borrower, which can make it more difficult to obtain credit or loans, and can result in higher interest rates and fees.
Having a good credit score is important because it can affect many aspects of a person's financial life, such as their ability to obtain a loan, get approved for a credit card, or even rent an apartment. A good credit score can also result in lower interest rates and better terms for loans and credit cards, which can save a person money over time.

In India the credit score of individuals is the domain of 4 credit bureaus – Equifax, CIBIL™, Experian™ and CRIF High Mark™. From lenders they collect the data of individuals who have taken any of credit compiling them in the form of a credit report based on which they calculate the credit score using their own proprietary algorithm.
Credit scores used to be an alien topic in India but not anymore. A survey found that 3 out of 4 Indians check do a credit score check credit score twice a year. Many Indians check credit score online to improve it while others check it to get a credit card or loan.
Even though many do the free credit score check to improve it, 3 out of 6 Indians were shocked to know that credit score is checked by lenders before approval of loan and that some mobile service providers check credit score before finalizing post-paid credit limit. This indicates that there is enough scope to educate Indians about credit score and its importance.
Another factor is that Indians with income higher than Rs.5 lakhs check their credit score at least twice in a year compared to people with lower income.

Checking your credit score frequently helps you take smart financial decisions. Based on the score, you can approach a bank to apply for a loan or credit card and bargain for better terms. Even a small reduction in the interest rate of big-ticket loans can save you a lot of money in the long run. You may wonder how and where you can do the free credit score check. Following are the ways to check your credit score at various platforms:

* Credit Bureaus: As per the RBI mandate, each credit bureau should give your credit report and score for free once a year. You can check it online at their official website or by mailing them.
* Third-Party Financial Portals: Third party financial sites provide credit score for free round the year. You can check it anytime from anywhere and it’s completely free. Checking your credit score does not hurt it, and you can check it for any number of times.
* Banks: These days some of the banks also provide credit score. Some lenders charge a fee while some provide it for free.
* To check your credit score online for free, you may need to enter the details of your Name, Date of Birth, PAN, employment, etc. After submitting the details, your credit score and report will be fetched from the credit bureau for your view. It just takes minimum of 2 minutes to check your credit score for free.

The factors that determine your credit score are:
* Payment history – The most important factor. How regular you are on your loan/credit card payments
* Amounts owed/Credit Utilization – Having very high debts or maxing out credit cards with dues continuing for many months will have a negative impact on your score
* Length of credit history – The longer the credit history, the higher the credit score
* Credit mix – Having multiple types of credit like personal loan, credit card and car loan shows that you can handle different type of credit efficiently and responsibly
* New credit – Taking out credits within short time negatively affects your credit score

If you have obtained your credit score from different bureaus you would have noticed that your score varies from bureau to bureau.The reason behind this is:
* Each bureau has its own method to calculate credit score. Thus, the score will vary from bureau to bureau.
* Your lender might not have reported your recent data to a credit bureau or might not be reporting to a particular bureau at all. If you check your score with said bureau it might be low.
* Length of credit history – The longer the credit history, the higher the credit score

You can check your credit score any number of times, and you can be certain that it does not affect it anyway. When you check your credit score on your own, it is called soft enquiry which does not have bearing on your credit score in any way. But when the lender checks your credit score when you apply for a loan or credit score, it can affect it slightly. It’s called hard enquiry. When you apply for a loan with multiple lenders simultaneously, multiple hard enquires are made which can have a negative impact on your credit score.

Maintaining a good credit score can be done easily by doing the following:
* Pay your bills on time: Regular and on time bill payment has the highest weightage when calculating your credit score. So always pay your credit card bill or loan EMI on time. Make sure you have set up an alert to remind you about payments or opt for automatic payment where the lender withdraws the money owed on the day already decided by you.
* Keep your credit utilization low: Keep your overall credit utilization low, i.e. say you have 2 credit cards which have Rs. 50,000 and Rs.40,000 as their respective credit limits which adds up to a total credit limit of Rs.90,000. The recommended credit utilization ratio is 30% i.e. Rs. 27,000. If a person keeps using a lot of credit especially maxing out their credit limit will negatively affect their credit score.
* Don’t close old credit cards: When you close old credit cards the card issuer stops sending updates to the credit bureaus. The credit bureaus also give less weightage to closed accounts. This could bring about reduction in your credit score. Also, your overall credit limit reduces which means your spending capacity and staying below the ideal credit utilization ratio is difficult. You must remember that after 10 years the closed credit card account will be removed from your credit report which could bring down your score when your really don’t want it to happen.
* Limit new credit application: It is best to limit new credit application within a short time period as each hard enquiry will be listed on your credit report, which brings down your credit score. Also, if lenders see a lot of enquiries listed on your credit report, they will get the impression that you are desperate for credit and don’t know how to manage your finances.
* Monitor your credit report regularly: Check your credit report on a regular basis. RBI has mandated that all credit bureaus provide one free credit report each year to customers. But we suggest that you have a look at your credit report at least twice each year.
This is important because there could be mistakes on your report. Th mistakes could occur if the lender makes a mistake or due to identity theft or credit card fraud, which could bring down your credit score.

* Having a good credit score can help you secure loans and credit cards with ease. Lenders prefer applicants with good credit score as they show positive track record of repayments. Following are some of the benefits of having a good credit score.
* Low interest rates on loans: Individuals with a good credit score can secure any type of loans with a good rate of interest. This is a bonus for having a good credit score. A high interest rate loan can pinch your pocket and become a burdensome in the long run.
* Greater chances of loan and credit card approval: As the good credit score is a representation of good financial habits, the lenders are no more reluctant to grant more credit to individuals with a good credit score.
* Higher limits on credit cards: The good credit score can make you eligible for higher credit card limits. Higher limits can help keep your credit utilisation ratio low and thus improve your score further.
* More negotiating power: With a good credit score, you can gain the power of negotiating with the lender. You can bargain for a lower rate of interest on loans and get your favourite credit card that comes with numerous benefits.

Following are the reasons why most people may have poor credit score:
* Late Repayments: You must remember that even one or two delayed credit card bill or loan repayments can affect credit score negatively. The more the number of delayed payments, the greater is the negative impact on your credit history and credit score. Though you may repay the amount later with a penalty to the lender, it gets reported by the lender as delayed payment to the credit bureaus.
* Missed payments: As major chunk of weightage in credit score calculation depends on repayment history, hence it is vital you do not miss a single payment on your credit card or loan EMI. Even a single default can hurt your credit score, making it difficult to avail credit in the future.
* Poor Credit Card Utilisation: Maxing out credit card limit implies you are credit hungry which could impact your credit score negatively. Experts recommend that having a credit utilisation ratio of 30% and below is good for your credit score. In case you use your credit card often, you can request for a higher credit limit on your credit card or get another card to balance the credit utilisation ratio.
* Multiple Loan Applications: As we already know that a hard enquiry can negatively impact your credit score, you must keep tabs on your loan applications. Applying for the same loan with multiple lenders can work against you as multiple enquiries are made. Hence, apply with the lender only where the approval chances are higher. You can check your eligibility for free for all loans on financial portal like CreditMantri which can avoid a potential rejection.
* Administrative Error: Occasionally, there may be an administrative error that results in wrong information being recorded on your credit report. Sometimes, this might be the result of fraudulent activity as well. For no fault of yours, these errors could lead to a lower credit score, signalling to future lenders that you have bad credit.
* Foreclosure: It happens in secured loans, wherein the lender sells the property through auctions and retrieve the outstanding loan amount. It can significantly reduce your credit score.
* Written-off: The lender writes off your loan or credit card account if you have continuously defaulted on repayments for 180 days. This gets reported to the credit bureaus by the lender, and your credit report shows written-off status. This can affect your credit score negatively and make you ineligible to avail loans.
* Settled: When you are unable to repay the loan, the lender allows you to settle the loan account for a mutually agreed amount which would be lower than the outstanding loan amount. This is a negative issue which will impact your credit score negatively.