What Do You Mean by a Credit Score?
A credit score is a three-digit number representing a person’s creditworthiness. It assesses your ability to repay a loan from a financial institution. And a high credit score entitles you to additional advantages from financial institutions.
What is a Credit Score Range?
A credit score in India ranges from 300 to 900. High credit scores mean you are more likely to be approved for a loan or a credit card.
Since not all creditors and lenders report to different credit bureaus, you may have a creditor who only reports to one, two, or none. Various scoring models are available based on the types of loans and the lender’s preference for specific criteria.
A person’s credit score is essential in determining their creditworthiness and can affect the following:
- A lender, such as a bank or a non-banking finance company, will evaluate a potential borrower’s credit score to determine whether or not to lend to the individual.
- The amount of loan sanctioned and the borrower’s credit score also influence the interest rate payable on the loan. Furthermore, the lender may reject the loan application if a borrower’s a low credit score.
What is a Good Credit Score in India?
The closer your credit score is to 900, it is said to be the best credit score, and the more likely your loan application will be approved. In general, a credit score of 750 or higher is considered good.
As a result, knowing the factors influencing your credit score is critical. They are timely and total payments of EMIs and credit card bills. If your credit score is low, the reason could be late or missed payments and high credit usage.
What Affects the Credit Score?
Here are some tried-and-true habits you could use to establish or maintain responsible credit:
Always pay your bills on time.
The payment covers not only credit cards but also late or missed payments on other accounts. If you have difficulty paying a bill, contact the lender immediately. Even if you’re disputing an account, contact the lender.
Maintain a credit card balance that is well below the limit.
A balance that exceeds your credit limit may affect your credit score.
Apply for credit only when necessary.
Applying for multiple credit accounts in a short period may impact your credit score.
Check your credit reports regularly.
You must request free copies of your credit report and review it to ensure that all personal information is correct. You will receive free copies of your credit reports from three nationwide credit bureaus once in 12 months by visiting www.annualcreditreport.com. You can get a copy every four months and keep track of your reports.
What Information Do You Not Consider in Your Credit Score?
You should not consider the following to affect your credit score.
- Your race, colour, religion, national origin, gender, marital status
- Any receipt of public assistance or exercise of any Consumer Credit Protection Act consumer rights.)
- Your age
- Your salary, occupation, title, employer, date of employment, or work history (Keep in mind that lenders may consider this information when making overall approval decisions.)
- Your current address
- Inquiries: You should handle inquiries gently. Companies making promotional credit offers initiate soft inquiries. Soft inquiries mean checking your credit report or using credit monitoring services from Experian. Your credit scores are unaffected.
FAQs on good credit score
Is a credit score of 800 Good in India?
Scores above 800 are excellent, and you can quickly negotiate a lower interest rate on personal loans and credit cards. You need a good credit score for secured loans. However, the bank may conduct additional research (such as a social score) or impose slightly higher interest rates for unsecured credit.
In India, what is a bad credit score?
CIBIL scores range from 300 to 900. If your score is close to 900, the more critical it is. While scores between 300 and 549 are considered poor, scores between 550 and 700 are considered fair.
In India, which credit score do you need in banks?
Non-banking financial companies and banks use CIBIL, Experian, and Equifax credit scores to assess customer lending risk. Lenders use these scores to determine the credit limit for all eligible customers. The CIBIL score refers to a three-digit number between 300 and 900.