BQ Big Decisions: What’s In A Credit Score? And Why Do You Need To Know Yours?
BloombergQuint’s Big Decisions podcast gets you the insights you need to make big money decisions with confidence.
Have you ever wondered why the rate of interest you pay on a bank loan is different from your neighbour’s or your colleague’s? If it is lower than theirs, and assuming you all took loans at the same time, it’s probably because the bank believes you are more creditworthy than they are.
In other words, the bank believes that you are more likely to repay the loan on time than your neighbour or colleague. As a result, the bank bears a lower risk that you will default on your payment.
A credit score is one of the measures that banks look at when deciding whether to give you a loan and what rate of interest to charge. This score is generated by credit bureaus or credit information companies. TransUnion CIBIL, India’s leading credit bureau, scores individuals out of 900. If you’ve ever taken a loan or if you’ve ever used a credit card, you have a credit score.
On this BQ Big Decisions podcast, BloombergQuint spoke with Sujata Ahlawat, vice-president and head of direct to consumer at TransUnion CIBIL, about how a credit score is calculated and what you need to do to make sure you have the best possible score.