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A good credit history will vouch for you in many ways.

- Mohan Jayaraman

For most people, a credit score may look like a simple three-digit numerical expression of an individual’s credit worthiness, assessed by a credit bureau at a point in time. But for a potential lender, it gives a deeper insight into someone’s ability and willingness to pay off debt, and more importantly, the aptitude to handle money itself. Thus, banks and institutions prefer a customer who has better hold on his or her personal finances as well as a healthier track record of fulfilling financial obligations, especially credit servicing, on time.

A good credit history will vouch for you in many ways when it comes to getting a credit card, a car loan, home mortgage and so on. Your credit score is derived from detailed analysis of your credit history, which includes major financial step you have taken, your overall behaviour in handling money and other valuable assets that you have created, besides your general attitude towards financial obligations, including your utility payments. In short, a detailed history of your loan and credit card payments, defaults and other key financial decisions make up your credit history, using which a credit score is derived at. So, whatever you have done in the past or are doing in the present will all weigh in on your credit score.

Importance of a good credit score: