Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What is a Credit Score and How Can Insurance Help You Improve it?

A credit score is a quantitative indicator of a person's creditworthiness. Lenders use it to determine the risk involved in making a loan. Continue reading to learn more.

  • May 25, 2023

An individual’s creditworthiness is represented numerically by their credit score. It is used by lenders, creditors, and financial institutions to assess the risk of lending money or extending credit to an individual. A good credit score can make it easier for an individual to obtain loans, credit cards, or mortgages with favorable terms and interest rates.

    Key takeaways

  • A credit score is a number that is used to represent your credit history and current financial standing. It ranges from 300 to 850.
  • The higher your credit score, the more likely you will receive favorable interest rates and loan terms from lenders.
  • A good credit score is crucial in determining your eligibility for loans and mortgages, as well as the interest rates you’ll receive.
  • Individuals with better credit score can get higher coverage and easy issuance.

What is a Good Credit Score?

A credit score is a number that ranges from 300 to 850 and is used to represent your credit history and current financial standing. The higher your credit score, the more likely you will receive favorable interest rates and loan terms from lenders. On the other hand, a low credit score can impact your ability to obtain credit and lead to higher interest rates, making it more expensive to borrow money.

The score you get is based on the information contained in your credit report, which is a comprehensive record of your credit history. Your credit report includes information on your accounts, such as credit cards, loans, and mortgages, as well as payment history and outstanding balances.

How to Check Your Credit Score?

As a consumer, you must regularly check your credit score to ensure that your financial health is good. Your credit score plays a major role in determining your financial future, including the ability to secure loans, credit cards, and even rental applications.

Step 1: Obtain a Free Credit Report

The first step to checking your credit score is to obtain a free credit report from one of the three major credit bureaus: Equifax, Experian, and TransUnion. By law, you are entitled to one free credit report per year from each credit bureau. You can obtain this report through the official website

Step 2: Review Your Credit Report

Once you have received your credit report, it’s essential to review it thoroughly for any inaccuracies or errors. Look for discrepancies in personal information, such as your name, address, or social security number, and any incorrect information about your credit history, such as missed payments or incorrect account balances. As soon as you discover any inaccuracies, notify the credit bureau.

Step 3: Check Your Credit Score

Your credit report will not include your actual credit score. You can obtain your score for a fee from the credit bureaus or a third-party credit monitoring service. Alternatively, many credit card companies now offer free credit scores to their customers. Remember that your score may vary slightly between the different bureaus, so it’s essential to check all three.

Step 4: Analyze Your Credit Score

Once you have your credit score, it’s essential to understand what it means. A score of 720 or higher is considered excellent, while a score of 660 to 719 is considered good. A score of 620 to 659 is considered fair, while a score of 600 to 619 is considered poor. If your score is lower than 600, it’s important to take action to improve it.

Credit Score Range

What it Implies

720 or higher








Below 600

Very Poor

Step 5: Improve Your Credit Score

If your credit score is low, there are several steps you can take to improve it. Pay your bills on time, pay down your debt, and limit new credit applications. You can also dispute any inaccuracies on your credit report, which can significantly impact your score.

Does Credit Score affect your life insurance purchase?

While a few insurance companies may review your actual credit report, the majority rely on credit score for assessing creditworthiness. A credit score is a number depicting the overall health of your credit profile at a specific moment. Insurance companies and organizations developing credit scoring models take into account various factors to calculate credit scores.

Typically, individuals with higher scores are considered more financially responsible. The primary factors commonly considered include major negative items such as bankruptcy, collections, foreclosures, liens, and charge-offs, as well as past payment history, including the number and frequency of late payments and the duration between the due date and actual payment date.

Does Credit Score affect your life insurance premium?

While your credit may not directly affect the life insurance premium you need to pay, it certainly can be one of the many factors that affect your overall insurance experience.  When you apply for an insurance cover, the insurance company will check your financial background and credit score is one of the ways of checking your financial health. Insurance agency uses your credit score to judge your HLV (Human Life Value) and decide your credibility.

If your credit score is strong, it gives the company a sign that you are financially fit and also gives them aa better picture of your income. This in turn reduces paperwork because if the issuing insurance firm finds the credit score satisfying, they won’t ask for income proof evidence and the process of purchasing life cover gets easier.

Individuals with better credit score can get higher coverage and easy issuance.

How Insurance companies use your Credit Scores?

Insurance companies utilize credit information as part of their underwriting process, which involves assessing whether to issue a new policy or renew an existing one, as well as determining the appropriate insurance premium. Credit information is considered by most insurance companies as a factor in calculating the insurance rate. In addition to credit scores, insurers take into account other traditional rating factors such as financial credit records and claims history.

How Can Insurance Help Improve Credit Scores?

Insurance is an essential aspect of financial planning and stability, but it can also positively impact your credit score. A good credit score is crucial in determining your eligibility for loans and mortgages, as well as the interest rates you’ll receive. Here are five ways insurance can help improve your credit score.

Demonstrating Financial Responsibility

Insuring your assets, such as your home, car, or other valuable possessions, shows that you are responsible and take your financial obligations seriously. This is because insurance companies typically require you to pay premiums on time, and a history of timely payments is a positive signal to credit bureaus.

Payment History

Consistently paying your insurance premiums on time will improve your payment history, which is a major component of your credit score. Late payments, however, can damage your credit score, so it’s crucial to make sure you pay your premiums on time.

Credit Utilization

Your credit utilization ratio, the amount of credit you use compared to your credit limit, also significantly determines your credit score. Some insurance policies allow you to pay your premiums on a monthly basis, which can help you avoid over-utilizing your credit card or loan, thereby improving your credit utilization ratio.

Credit Mix

Having a mix of different types of credit, such as installment loans, credit cards, and insurance policies, can also improve your credit score. This is because it shows that you can handle various types of credit responsibly, and it demonstrates your financial stability and ability to manage debt.

Length of Credit History

The length of your credit history also affects your credit score, so taking out insurance policies and keeping them active for an extended period of time can improve your credit history and, in turn, your credit score.

Wrapping up

A credit score is a crucial factor in an individual’s financial health and stability. Understanding what it is and how it is calculated can help individuals take the necessary steps to improve their credit scores and secure their financial future. By paying insurance premiums on time and protecting their assets, individuals can demonstrate their ability to manage their finances responsibly to lenders and creditors.

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


- A Consumer Education Initiative series by Kotak Life

Similar Articles

Can ULIP Help in Achieving Short-Term Financial Goals?

Early Investing and the Power of Compounding

What is a Savings Plan and What are is Benefits?

Everything You Must Know About ULIP Riders

Why ULIP is Better Investment for Long-Term Wealth Creation?

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

How Can ELSS Funds Help You Save Tax & Create Wealth?

Short Term and Long Term ULIP Plans for Wealth Creation

A Step-by-Step Guide: How To Make An Investment Plan?

Building wealth through regular investing

Learn About Safe Investments with High Returns in India

Is This The Right Time To Invest In ULIP? Why or Why Not?

Four Financial Lessons from The Vedas on Living Life to The Fullest

ULIP as an Investment for Your Child

Different Types of Endowment Plans

Best Guaranteed Returns Investment Options to Meet your Financial Goals

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

Top 5 Investment Options in 2022 for Healthy Returns

How to Calculate Your ULIP Returns?

How to Fulfil Your Financial Goals in the Next 10 Years?

ULIPs: Suitable for all

8 Important Tips to Maximize Gains with ULIP Investments

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

What are the Best Investment Options For Females?

How to Use Recurring Investment Strategies to Build Wealth?

Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?

ULIP Benefits You Can Avail from Early Investing

Importance of Portfolio Management

Which is a Better Investment - Mutual Funds Or ULIP?

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?

Which are the Best Investment Plans for Indian Senior Citizens in 2022?

ULIP NAV Meaning & How is the Return Calculated in ULIP

How To Track ULIP Performance?

Which are the Best ULIP Plans in India for Children?

Learn About Safe Investments with High Returns in India

How to Plan Your Child's Education - A Step-by-Step Guide

Rate of Interest on Different Investment Plans in India

Do You Know the Difference Between Savings and Investment?

What are the Best Investment Options for Students in India?

What are Mutual Funds?

Long Term Savings Plan - Best Savings Investment Plans in India

How to Cancel ULIP Policy?

Investment Options for NRIs in India

Why Should Parents Invest in Endowment Plan?

What are the Advantages and Disadvantages of ULIP?

Things to Know Before Buying an Endowment Plan

How to Make Your Financial Portfolio?

What Is Financial Planning?

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

What is NAV in ULIP, and How is it calculated?

Difference Between Guaranteed Savings Plan and ULIP

What are Index Funds and How Do They Work

Planning for Your Child's Higher Education? Explore These Investment Options

Are Gains from ULIP Sale Taxable?

What is SIP Calculator, And How Does it Work?

How is the Compound Annual Growth Rate (CAGR) Calculated in ULIP?

Safe Investment Options with High Returns for FY 2018-19

Does Rupee Cost Averaging Work In Unit-Linked Insurance Plans?

What are Some of the Safest Investment Options in India?

Factors Affecting Stock Markets

यूलिप प्लान में परिपक्वता लाभ क्या हैं: फंड वैल्यू सम एश्योर्ड या ओनली फंड वैल्यू?

Planning Financial Goals and Objectives of Financial Planning

What is the Time Value of Money (TVM)?

How to Manage Your Portfolio Like a Professional?

ULIP Capital Gain Tax: Check Tax Norms for Capital Gain on ULIPs

Best Investment Options in India in 2022

Debt ULIPs vs. Debt Mutual Funds: What's the Difference?

What are Tax-Deferred Savings Plans?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

Best One-Time Investment Plans in India

Why Are ULIPs Called Flexible Investments?

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

Is the ULIP Policy Surrender Value Taxable?

Important Questions You Must Ask Yourself When Buying a ULIP Plan

How to Choose the Best ULIP Plans to Invest in 2022?

What is Equity Mutual Funds: Meaning, Types & Benefits

Got a Salary Hike? Here’s How to Plan your investment further

Are Money Back Policies Helpful? A Complete Guide

Creating a second source of income with life insurance

How Much Wealth Can You Create from ULIP in 10 years?

What are the Best Investment Options for Young Adults?

Are Investment Returns Guaranteed in a ULIP?

Why are ULIPs One of the Best Tax Saving Instruments?

What are loyalty additions, and how do they work in a ULIP?

Can ULIP Policy be Transferred?

What is Direct Investment and its Types?

Difference Between Passive and Active Investing

ULIP vs FD - Which is Better and Why?

What is ULIP Plan, and How Does it Work?

How To Diversify Portfolio In 2023?

वित्तीय संपत्तियां और उनके प्रकार

लॉयल्टी एडिशन क्या हैं, और वह यूलिप में कैसे काम करते हैं?

How Do One-Time Investment Plans Work?

8 Charges in ULIP That You Must Know

Successful Financial Planning for Urban Women

Top 5 Principles That Need to be Followed for Wealth Creation

4 Benefits of ULIP Fund-Switching Feature

Why Do You Need A ULIP Plan - All You Need To Know

Why Should You Build an Emergency Fund?

What are Financial Assets & their types?

What are the Best Investment Options for Beginners or Amateur Investors in India?

Benefits of ULIP as a Child Insurance Plan

The Importance of Starting Early: Securing Your Child's Future with a Child Education Plan

Difference Between ULIP and Endowment Plan?

Top 10 Investment Strategies to Create Wealth

Why Should I Invest in ULIP?

What is Compound Interest, And How Do I Calculate it?

Top 10 Investment Plans Available in India

ULIP Plan as a Gift

Endowment Plan vs Fixed Deposit?

How Does an Endowment Plan Work?

यूलिप के फायदे और नुकसान क्या हैं?

How to Increase Net Worth Along with Family Protection

यूलिप के फायदे (Benefits of ULIP in Hindi)

Savings Plan for Grandchildren

What is Money Management? Definition & Example

How to Plan Savings from Salary?

How to Start Saving Money in 10 Simple Ways?

Best Investment Plans for Children - Secure Your Child's Future

The lesser-known facts about ULIP policy that customers should be aware of?

Which is Better – FD, Mutual Fund, SIP, or ULIP?

6 Important Tips to Maximize Your Gains with ULIP Investments

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

What is a Child Money Back Plan, and How Does it Work?

What is ULIP Renewal?

How to Plan your Investment to Achieve Periodic Financial Goals?

What is ULIP and Its Benefits?

Asset Allocations in ULIP - Know the Top Benefits

How to Manage Inheritance Money?

Corporate Bonds: Meaning, Types & Benefits

How To Invest Money In ULIP?

Best Investment Options to Cover Your Child's Education

Customising investments to manage your wealth

Receiving regular payouts at various stages of life

Here's Why it's a Good Time to Explore ULIPs as an Investment

What's Better for Your Child's Education? Child Plans or Mutual Funds?

Investments Options to Buy a house in India

Why Should You Invest in Term Insurance And ULIP?

ULIPs Investment – A Boon or Bane?

What is the Importance of Saving Money?

What are the Best Short-Term Investment Plans with High Returns?