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Credit Score/ Cibil Score | Meaning, How To Improve It

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A credit score is a numerical value which determines your ability to pay back the borrowed amount.

This shows your creditworthiness. It is a 3 digit number that falls in the range of 300-900 (where 900 is the highest).

Credit scores are anylized and calculated by the credit bureaus in the country after taking into consideration several factors like the length of your credit history, repayment records, credit inquiries, among others.

When you apply for a credit card or a loan from a bank of NBFCs, having a higher credit score may entitle you to receive further benefits such as a higher loan amount, lower interest rate and your choice of tenure to repay the loan.

Know Your Credit Score:

  • Visit credit score Page
  • Enter your first and last name.
  • Add your mobile number and e-mail ID.
  • An OTP will be sent to your mobile number for verification.
  • The next step would be to verify your age.
  • Your credit score and your report will be then displayed on the screen.

Who calculates my credit score?

When you make a transaction—the one that is relevant to determine your score—banks send details about it to all four credit bureaus. To send details to all credit agencies is a mandate by the RBI. Essentially, banks keep Credit Information Companies up-to-date about your monetary habits. If a bank needs to check this online, they can approach any one of the bureaus. It doesn’t matter which one because all will have the same score for you– all four are equally authoritative and on par with each other.

After receiving information from the bank, credit bureaus get down to the task of collecting more information about your financial habits from other banks and financial institutions. The credit bureaus then processes this information to formulate what is called a Credit Report.

Why should I check my credit score regularly?

Checking credit score regularly is a really important task. It is the best way for self analysis of your habits and behaviour or how you use credit card. Another reason why you should track your count is to know if it dips, or if an error had been made by credit agencies while calculating your score. This will help you make timely amends.

In other words :Checking your credit history and credit scores can help you better understand your current credit position. Regularly checking your credit reports can help you be more aware of what lenders may see .

I Have heard that Enquire Affects my Credit Score. Is it True?

It depends on the kind of enquiry being made. There are two types of enquiries – hard and soft enquiry. Hard enquiries send your Credit Score down by a few points, while soft enquiries do not impact your Credit Score.

An enquiry made by an individual is called a soft enquiry. BankBazaar will make a soft enquiry on your behalf when getting your Credit Score from Experian. Hence, this will not impact your Credit Score in any manner. Moreover, you can get your free credit score.

A hard enquiry is when a financial institution checks your Credit Score to take a decision on your credit application. Every time you apply for a loan or a Credit Card, the lending institution checks your score. Each time a bank checks your score, your score will dip by a few points.

TIP: if you are applying for a loan or a Credit Card, do not apply to many banks at the same time. Too many enquiries will hurt your points.

Credit Score Range and What It Means:

A credit score in India ranges between 300-900. You should always take measure to bring your score closer to 900. A higher score increases your chances of getting a good deal on loans as well as credit cards.

CIBIL Score Range

The CIBIL score (a 3-digit number) gives a summary of the credit history from several details on the Credit Report such as ‘Enquiries’ and ‘Accounts’. The CIBIL score ranges between 300 and 900. The higher the CIBIL score, the easier it is to get a loan or a credit card approved. Making late payments and multiple enquiries will lead to the CIBIL score reducing. Any score of 750 and above is considered as ideal and you will qualify for various credit cards and loans. In case your credit score is less than 750, you will find it difficult to avail a loan from NBFC and banks.

In case the loan is approved, the interest rates will be high if the CIBIL score is close to 750. Banks and NBFCs will reject the application if the credit score is low. The four important sections of the credit report are Credit Enquiries, Public Records, Account History, and Credit Summary. The various factors that are considered by CIBIL when they compute the credit score are the credit mix, new credits, tenure, credit utilisation, credit balance, and repayment history.

Experian Score Range

The Experian score ranges between 300 and 850. A count in India of 800 and above is considered excellent. A good credit score is anything above 700. The higher the credit score, the more confident banks and NBFCs are that you will be able to repay the loan. Most credit scores range between 600 and 750. Various lenders such as NBFCs and banks provide loans and cards based on the credit score. Approval of car loans also depends on this. The better the count, the down payment and the interest rates will be low.

Credit scores ranging from 300 to 579, 580 to 669, 670 to 739, 740 to 799, and 800 to 850 are considered to be very poor, fair, good, very good, and excellent. This depends on several factors such as derogatory information, recent credit applications, history, history length, utilization, and payment history. Some of the factors that do not influence this are details not available in the credit report, child support payments, where you stay, your income, your employment, and your age. Paying all your bills on time and not making several enquiries will ensure that it does not drop.

Why should you have a good credit/cibil score?

Credit card is the fastest way of getting a loan from a bank, it is instantaneous.

So if you have a good count, you can avail loan and Credit Card faster and with ease.

Get the best Credit Card: A good number may get you the best of cards available. Get a lot of rewards and many more features.

Quick Loan Approval – A good Score works like an expressway for your loan application. Banks may approve your application quickly and readily.

Better Interest Rate – With the backing of a good Score, you can bargain for a lower rate of interest on loans and Cards.

Loans Made More Affordable – Loans come saddled with processing fees and many other charges. You can bargain your way out of some of these charges with a good number.

NOTE: Lenders check your CIBIL points to check your worthiness, as your number is higher lenders will gain more trust on you.

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