The range of CIBIL Score is 300–900, usually Credit Score above 700 are considered to be good. But less than 700 score doesn’t mean you have a bad Score, it is an average Score. More importantly, you can get loans from many NBFCs and Banks with this score. But note that you can work towards improving your score above 700 .Your credit score plays a key role when you apply for a loan. The following ways will help you in understanding your Credit Score:-
Credit Report
It is a detailed report of your credit history. Credit bureaus collect information from various sources (lenders like banks, credit card companies, and NBFCs) to create your credit report. Credit bureaus charge Rs 300-500 for providing a credit report.
Credit Score
Though the score ranges between 300 and 900, the average is 700. The higher the score, the lower is your risk profile and easier for you to get a loan. Majority of those who get a loan have a score of 700 and above. With a lower score, you may not get a loan from a PSU bank or leading commercial banks, but from NBFC, at a slight higher rate of interest.
What is considered as a Good Credit Score?
Categories of Credit Score:
Payment history (35% of score): Do you pay your EMIs and your credit card bills on time, every month?
Amounts owed (30%): How much do you owe on your credit accounts, particularly relative to your credit limits or original loan balances?
Length of credit history (15%): This considers various time-related factors, such as the age of your individual accounts, the age of your oldest account, and the average age of all of your accounts.
New credit (10%): Newly opened credit accounts, as well as your recent applications for credit, are included in this category.
Credit mix (10%): Lenders want to see that you can be responsible with different types of credit, so having several different types of accounts (credit card, mortgage, auto loan, and so on) can boost your score.
What can you do with good credit?
If your score is in the “good” range in the chart, you’ll generally be able to qualify for a all type of loan with a competitive interest rate. The best rates are reserved for top-tier buyers, but the difference in interest rates between good and excellent credit scores may be less than you think.
The following factors are to be considered to improve your Credit Score:-
1. Pay all Overdue
It is extremely important to pay your EMIs and Credit card bills on time. This affects 35% of your score. Your credit scores can be significantly impacted with just one late payment reported to your credit history.
2. Pay down Minimum Balances
If you currently have credit cards and have utilised all your limit then make sure you should pay minimum credit card dues which are generally 5% of your outstanding amount.
3. Pay all EMIs and credit card outstanding regularly
Use auto-pay option to pay the minimum credit card outstanding amount every month and your scores should continue to improve.
4. Monitor your Credit Score
Complete a thorough review of your credit report. You are legally allowed a free copy of your report from each bureau once a year. Look for inaccuracies in balances, payment history, and questionable collections.
What if you don’t have a CIBIL score?
Your CIBIL score works like a report card for your credit status. It is calculated after taking into consideration several factors like credit history, repayment behaviour, and type of credit, among others. A long credit history makes it easier for lenders to take a sound decision about offering you a loan. However, if you don’t have a CIBIL score, the lenders will take into consideration other factors such as age, income, and job stability to evaluate your creditworthiness.
Having a CIBIL score makes it easier for you to get access to credit products. Here are a couple of ways in which you can start working on building a credit history:
- You can apply for a secured credit card which is issued against a fixed deposit. You can use it just like a credit card and pay the bills on time to improve your CIBIL score.
- Generally, companies have partnerships with banks for its employees. You are more likely to get approval on a credit card from a bank that has an existing relationship with the company you are working for. You can then use your credit card for a few months following which you will have a CIBIL score. Make sure you are paying the bills on time to get a good score.
Credit Score – Myths
IBIL reports, generated on a monthly basis (as mandated by the RBI), help lenders evaluate and approve or reject loan applications, as the case may be. However, there are several myths associated with CIBIL which need to be busted.
What Credit Score do I need to get a Personal Loan?
The range of CIBIL Score is 300–900, usually Credit Score above 700 are considered to be good. But less than 700 score doesn’t mean you have a bad Score, it is an average Score. More importantly, you can get loans from many NBFCs and Banks with this score.
Free Credit Score
Credit Score is a three-digit number range from 300-900 that relates to how likely you are to repay debt. Banks and lenders use it to decide whether they’ll approve you for a credit card or loan. But that might be too late as the person’s loan application would have already been rejected and he would be left on to a loan path to rebuilding or improving his CIBIL score.
Credit Score Repair – Boost Your Credit Score FAST in 2021
Credit score is a three-digit numeric number found in the Credit Information Report and it plays an integral role in initiating the loan application process. The lower the score, the more trouble you may face. In case, you have bad credit history, it is necessary to follow certain measures to fix the issue.
Bad Credit Score – Side effects
The score is given based on your loan or credit card repayment track of at least 6 months to a year. Any score of 750 or above is considered a good one while a credit score below 600 is considered bad by lenders. When you have a good credit score, it brings a range of benefits such as lower interest rates, higher borrowing or credit limit, quick disbursal, etc.
5 Things lenders check beside your Credit Score
Credit Score isn’t the only thing that could make or break your ability to get a loan or line of credit. Many lenders – mortgage lenders, especially – will also calculate a potential borrower’s debt-to-income ratio to determine whether they’re suited to take on another monthly payment.