All About Credit Scores

A Healthy Credit Score Is A Barometer Of Your Financial Health. Here's What You Need To Keep In Mind

- Teena Jain Kaushal

PRAPHUL KUMAR was in for the shock of his life. While casually checking his credit score one day, he saw it at a low 650, instead of his usual score of 870. That set alarm bells ringing. “I dug in and read through the credit report, and found there are loans running [in my name]. I never applied for these loans. They were given without my consent and knowledge. My personal details such as date of birth and address were also not valid,” says the 33-year-old Pune-based businessman, adding that his PAN card details were used to obtain the loan. The amounts were small—₹5,000 and ₹56,000— but they hit his credit score, and impacted his credit profile.

Kumar isn’t alone. Bollywood actors Rajkumar Rao and Sunny Leone also tweeted that their PAN details were used by a third party to take loans of small amounts up to ₹2,500.

These incidents of identity theft indicate why it’s necessary to keep a close tab on one’s financial health. An easy way of doing it is by checking your credit score regularly. But what is a credit score? How do credit bureaus have so much sensitive data on you? And what is there in your credit score report? Let’s take a look.

The Magic Number

A credit score is a three-digit number assigned to an individual on a scale of 300-900 points. It is based on the unique algorithm of each bureau, with a score of 750 or above considered good. Credit bureaus score you primarily on six factors (see 6 Factors that Decide Your Credit Score).