Credit score is a numerical representation of creditworthiness of an individual number ranging from 300 to 900. It is like a financial report card of individual.
Credit score is given based on the credit history. A credit history consists of following aspects:
- No. of credit accounts
- Type of credit accounts (secured or unsecured)
- Credit amount and how much of it is being utilized regularly
- Repayment history and recent credit inquiries.
The credit score is utilized by credit card companies or loan providers to check the Credit score of a person before issuing credit and decide on providing credit to him based on the credit score and analyzing the credit report.
They give credit based on the credit score they have. The higher the credit score more likely a person can get credit from the company and the lower the credit score less is the chance of getting credit.
Credit score is provided by Credit rating Agencies, they are CIBIL, Experian Score, Equifax score and Highmark score. You can check credit score freely nowadays. Mostly banks take CIBIL Score as base for giving loans.