Back in the 1960s, 1970s and even the 1980s, people lived a credit free life. There were no credit cards, no vehicle loans (not many owned cars anyway!) and no home loans – the business class and the richer sections of the society were the ones who could afford to build their own houses early in life. Many of the middle class and upper middle class people stayed in company provided/rental accommodations during their working years and used the PF/gratuity/terminal benefits to buy a house of their own on retirement.

Fast forward to the 21^st century. Globalization, a buoyant economy, and the changing consumer  mindset  has resulted in people taking loans early in life, even for things like going on a holiday, buying an expensive car etc without any hesitation, apart from the usual home loans and education loans.

Earlier whenever one applied for a loan to a bank or a financial institution, credit information on the borrower was collected and a credit report was prepared manually. But this spurt in demand for all kinds of loans – home, vehicle, education, personal, has given rise to agencies like the CIBIL (Credit Information Bureau of India Ltd) which specialize in this task of assessing a person’s credit worthiness by assigning each person a credit score.

What is a credit score?

 A credit score is a three digit number ranging from 300-900 assigned to a person to indicate how risky a borrower he or she could be. Higher the score, lesser the risk and higher the individual’s credit worthiness.

Why is a credit score so important?

 Your credit score is an important factor based on which the lending institution will decide whether you can be granted a loan. If you have a low credit score, you could be denied the much needed loan, or even if your loan is approved, you may be charged a higher rate of interest that those with a higher credit score. A credit score of more than 700 is considered good .

How can you find out your credit score?

CIBIL offers people the facility to buy their credit score online from their website www.cibil.com for a small fee. No documents need to be submitted for the same and the individual just needs to answer some basic questions that are asked; and the credit score along with the credit report is emailed to the customer. People who require a loan on an urgent basis are advised to buy a credit score first as this would significantly reduce your loan processing and approval time.