What actually moves a credit score, in order of weight
Five factors decide the number. Two of them account for most of it, and the one people worry about most barely registers.
A credit score decides whether you are approved and at what rate. On a ₹50 lakh home loan, half a percentage point of rate difference is about ₹4 lakh over twenty years — which makes the score one of the higher-value numbers in your financial life.
The five factors, weighted
1. Payment history — roughly 35%
Whether you paid on time. A single payment 30 days late can knock 50 to 100 points off a good score and stays on the report for years. Nothing else in the list does that much damage that fast.
Automate every minimum payment. Not the full amount if cash flow is tight — the minimum, so nothing is ever reported late.
2. Credit utilisation — roughly 30%
Your balances as a percentage of your total limits. Below 30% is the usual guidance; below 10% is better.
This is calculated on your statement balance, not what you owe after paying. Spending ₹90,000 on a ₹1,00,000 limit and clearing it in full still reports 90% utilisation for that month.
3. Age of credit history — roughly 15%
The average age of your accounts. This is why closing your oldest card is usually a mistake — it shortens your history and removes its limit from the utilisation calculation at the same time.
4. Credit mix — roughly 10%
A blend of secured (home, car) and unsecured (card, personal) borrowing scores better than one type alone. Not worth taking a loan you do not need for.
5. Recent enquiries — roughly 10%
Each hard enquiry costs a few points. Applying to six lenders in a week reads as distress.
What does not affect it
Your income, savings balance, investments, job title, or the fact that you have never borrowed. That last one surprises people: a thin file with no history scores poorly, not perfectly. The system measures repayment behaviour, and no behaviour means no evidence.
Checking your own score is a soft enquiry and costs nothing.
Where the score turns into money
Repairing one
There is no fast route, but there is a reliable one: pull your report from each bureau, dispute genuine errors in writing, bring utilisation below 30%, and never miss a due date again. Most of the recovery lands within six to twelve months.
Anyone offering to fix it faster for a fee is selling you the dispute process you can run yourself.
Where these figures come from
- Reserve Bank of India — Policy rates, lending and deposit regulation, credit card rules
Published by FinClamp. This guide is information, not financial advice — see the disclaimer.