EMI stands for Equated Monthly Installment. It is the fixed amount a borrower pays back to the lender every month. Each EMI consists of two components: the interest and the principal. The EMI remains the same throughout the entire loan tenure, although the proportion of interest and principal changes over time.

Paying EMIs is not just about clearing your loan; it also helps build your creditworthiness. A consistent repayment history shows lenders that you are disciplined in handling finances, which boosts your credit score. On the other hand, missing EMIs negatively affects your credit score and makes it harder to get loans in the future.

💡 Pro Tip: Always set up auto-debit or reminders for EMI payments to avoid accidental delays.

A credit score is a three-digit number (ranges between 300–900) that reflects your creditworthiness. It is calculated based on factors such as your repayment history, credit utilization, length of credit history, and types of credit. The higher your score, the more trustworthy you appear to lenders. A score above 750 is generally considered good.

💡 Pro Tip: Make it a habit to check your credit score regularly to track your progress and identify areas of improvement.

Every month, a huge amount of data is reported to credit bureaus, and errors can happen. You might see a loan account that you never took, a late payment that you never missed, or even a credit inquiry that you never made. These mistakes can negatively affect your credit score. By checking your score frequently, you can quickly identify such errors and report them to the respective bureau for correction, ensuring your credit profile stays accurate and healthy.

💡 Pro Tip: Use free apps like Paisabazaar, BankBazaar, or OneScore to check your credit report without affecting your score.

In India, there are four major credit bureaus licensed by the RBI:

• CIBIL (TransUnion CIBIL)
• Experian
• Equifax
• CRIF High Mark

All four bureaus collect and maintain credit data, but your score may differ slightly depending on which bureau’s report is being used.

💡 Pro Tip: Always check your score across all four bureaus at least once a year. Some lenders may rely on one bureau more than others.

Soft enquiry: A soft enquiry happens when you check your own credit score or when a lender makes a background check without processing a loan application. Soft enquiries do not impact your credit score.
Hard enquiry: A hard enquiry happens when you actually apply for a loan or credit card, and the lender checks your credit report to evaluate your eligibility. Multiple hard enquiries within a short period can negatively impact your credit score, as they signal that you may be credit-hungry.

💡 Pro Tip: Always compare loan offers on financial marketplaces first (soft check) before applying directly. This avoids unnecessary hard enquiries.

If you make multiple loan enquiries with different lenders, it shows that you are credit hungry. This lowers your approval chances, as lenders may assume you are struggling financially.

💡 Pro Tip: Instead of applying everywhere, shortlist 1–2 lenders with the best offers and apply strategically.

If you use credit cards, keep your credit utilization below 30% of your total limit. For example, if your card limit is ₹1,00,000, avoid spending more than ₹30,000 before repayment.

High utilization signals to lenders that you are overly dependent on credit, which can:

• Reduce your chances of getting new loans.
• Lead to higher interest rates if approved.
• Lower your credit score.

💡 Pro Tip: Spread your spending across multiple cards or make mid-cycle repayments to keep utilization low.

• Payment History (35%) – Timely repayment of EMIs and credit card bills is the single most important factor. Even one missed payment can lower your score.
• Credit Utilization (30%) – The ratio of how much credit you use compared to your total available limit. Keeping utilization below 30% is recommended.
• Length of Credit History (15%) – The longer your credit accounts have been active, the better. A strong track record shows stability.
• Credit Mix (10%) – Having a healthy balance of secured loans (like home or car loans) and unsecured loans (like credit cards, personal loans) improves your profile.
• New Credit / Enquiries (10%) – Multiple hard enquiries or opening too many new accounts in a short period signals credit hunger and can hurt your score.

💡 Pro Tip: Focus on payment history and utilization first — they make up nearly two-thirds of your score!