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A credit score is a three-digit numeric representation of your creditworthiness. Checking your credit score empowers you to maintain your credit health and improve it to get quick loan approval at lower interest rates. Use INDmoney’s credit score checker today to check your latest credit score for free.
What is a credit score?
A credit score is a numerical indicator of your creditworthiness and the ability to repay the debt. Financial lenders use this score to determine your repaying capacity when you apply for a new loan.
If you have a high credit score, you are considered more trustworthy and can get loans at favourable terms, conditions and interest rates. In addition, credit score influences the qualification of credit account types.
What is a good credit score range?
Having a credit score between 700 and 750 is usually considered good. It indicates that you are managing your finances well. In addition, it increases your chances of getting loans from financial institutions, as it suggests to them that you can repay the loan amount in due time.
Why should i check my credit score?
Regularly checking your credit score enables you to understand your creditworthiness and know how the financial lenders see you. Here are some reasons why you should check your credit score:
Loan Approval
When you check your credit score, you can identify the areas you can improve to increase your credit score. Increasing your credit score will boost your chances of getting loan approval from financial institutions.
Credit Health
Regularly checking your credit score with the best credit score tracker will empower you to understand the factors you can improve to increase your credit score. Hence, it keeps you aware of your current credit health.
Lower Interest Rates
Having a good or high credit score empowers you to get lower interest rates from financial institutions. It enables you to negotiate the terms and conditions of the loan with the lending organisation in your favour.
Fraud Prevention
In addition, regularly checking your credit score alerts you of any fraudulent activities in your name. In case you detect fraudulent activity, you must immediately contact the lending organisation.
Mistake Identification
When you check your credit reports, you must ensure that lenders report the payment history accurately. Regularly checking your credit score will enable you to spot any errors early.
CUR Under Control
A regular check of your credit score will enable you to keep the credit utilisation ratio under control. However, to maintain a good credit score, the credit utilisation ratio must be below 30%.
Does checking my credit score impact it?
When you enquire about your credit score, it is reported to the credit information report. There are two types of credit score inquiries. They are as follows:
Soft Inquiry
It is a soft credit check, occurring when you want to check your credit score or an employer or landlord checks the credit score by seeking your permission. In addition, it occurs when the lender checks your credit score to authorise you a loan offer. Moreover, a soft inquiry does not affect your cibil score as you are not applying for credit officially.
Hard Inquiry
A hard inquiry occurs when you apply for credit, such as loans or credit cards, and the lending organisation checks your credit score. It affects your credit score and temporarily lowers it.
Factors that lower your CIBIL score
There are certain factors that may affect your credit score and lower it. Here are six factors that lower your credit score:
Making a Late Payment
Your credit payment history plays a crucial role in credit score calculation. If you make a late payment, it lowers your credit score and hampers your creditworthiness. In addition, if you miss a single payment of the due amount, it can drop your credit score significantly.
High Credit Utilisation Ratio
The credit utilisation ratio(CUR) measures how much credit you are using out of the total credit limit. Financial organisations usually prefer a lower credit utilisation ratio under 30%. If you have a high CUR, it indicates you are overdependent on credit and facing difficulty in managing debt, lowering your credit score.
Several Loan Applications
Whenever you apply for credit, the financial organisation carries out a hard inquiry into your credit history. Having multiple loan applications within a short period can lead to several hard inquiries, affecting your credit score. It also indicates that you are dependent on more credit.
Closing Credit Card Account
You may want to close your credit card account by paying the due on time, but it may affect your credit score. Closing your credit card account, which you have used for a while, will reduce the length of your credit history and lower your score.
Guarantor on Defaulted Loans
If you are a guarantor on a defaulted loan, it will hamper your credit score. In case the borrower fails to repay the loan amount, it will reflect on your credit status and affect your creditworthiness.
Pausing Credit Activities for a Period
If you have stopped using your credit account for an extended period, it will become difficult for financial organisations to evaluate your credit application. In addition, after a certain period, the lenders may consider your credit account inactive or closed, which will affect your credit scores in the way of closing your credit card account & also track credit card bills.
What is the value of your CIBIL score?
Your credit score value may range between 300 and 900. If you have a good credit score, it reflects that you have a good credit history, making it easier for financial organisations to trust you. It makes them confident that you can repay their debts on time.
Here is a table illustrating the credit score range and the lender’s perception of the score:
| Credit Score Range | Description | Lender’s Perception |
| 750-900 | Excellent | Exceptionally Reliable |
| 700-749 | Good | Reliable |
| 650-699 | Fair | Moderately Risky |
| 600-649 | Bad | Highly Risky |
| Less than 600 | Poor | Unreliable |
How can i improve my credit score?
Improving your credit score is crucial as it will enable you to get credit at favourable terms and conditions and lower interest rates. Here are a few ways through which you can improve your credit score:
On-Time Payments
Ensure that you pay your bills on time, as it is one of the key factors in determining your credit score. Late payments can lower your credit score, hampering your creditworthiness. In addition, you can set reminders or automate the payments to ensure you are on time.
Credit Utilisation Ratio
Make sure you keep the credit utilisation ratio below 30% by using less credit than the total available limit. Having a higher CUR can indicate to the lenders that you over-rely on credit, adversely affecting your credit score.
Lower Outstanding Debts
Try to lower your outstanding debts by repaying them on time. It enables you to improve your credit score and get credit at favourable terms and conditions.
Check Credit Reports
Using INDmoney is the best way to keep track of credit scores. It empowers you to track your credit score and look for any discrepancies or errors. In case you encounter any discrepancies, you must report it to the credit bureau.
Diversify Credit
Having a mix of different credit, like instalment loans and revolving credit can improve your credit score. It indicates that you can manage your different types of credit effectively.
Avoid New Applications
Every time you apply for a new credit, the financial organisation performs a hard inquiry to check your creditworthiness. It can lower your credit score temporarily. Hence, you must apply for credit in case of extreme necessity.
Benefits of a good credit score
Having a good credit score enables you to have better creditworthiness. It also indicates that you can manage your credit effectively to the financial organisations. Here are some benefits of having a good credit score:
Quick Loan Approval
A good credit score enables quick credit approvals, as it acts as a trust signal to financial organisations. It is essential when you want loans in time-sensitive situations.
Low Interest Rates
When you have a good credit score, you can avail credit at lower interest rates from financial organisations. It enables you to save a lot in the long term.
Better Offers
With a good credit score, you can avail multiple credit card offers, like cashback, lower interest rates and travel benefits. Certain lending companies set aside their best offers for high credit score individuals.
Better Insurance Rates
A good credit score influences your insurance premiums, as insurance companies use your credit score to determine the interest rate. Having a high credit score enables you to have lower insurance premiums.
Financial Planning
If you have a good credit score, it will provide more certainty in your financial planning. It allows you to avail credit when required and manage unexpected expenses. Moreover, it empowers you to take advantage of investment opportunities.
Stronger Negotiations
With a good credit score, you can negotiate the terms and conditions of the credit with the lending institutions to make it favourable. It also enables you to choose the various bank offers according to your financial requirements.
Who gives credit/CIBIL score?
In India, Credit Information Companies (CICs) or Credit Bureaus calculate the individuals' credit score and ratings. There are four credit bureaus, where CIBIL (Credit Information Bureau (India) Limited) is one of the most popular credit bureaus. The other bureaus are Experian, Equifax and CRIF High Mark. These bureaus collect information on your loans and other types of credit to calculate your credit score. They collect data from different financial institutions, like banks, credit card companies, etc, and prepare a comprehensive report on your credit history.
How Does CIBIL calculate your credit score?
CIBIL uses the following factors to calculate your credit score:
Credit Payment History - 35% of Your Credit Score
The payment history depends on how you have managed to repay your debts. It keeps track of your last three years' payments. Hence, you must pay the due on time to manage the best way weightage.
Credit Mix - 10% of Your Credit Score
It is important to have a good credit mix, including secured, unsecured, long-term and short-term credit. Having these types of credit will indicate that you have a good credit mix.
Credit Utilisation - 30% of Your Credit Score
It refers to the total credit limit and how much you have utilised. CUR is crucial, and using most of your sanctioned credit limit will indicate that you are a risky borrower. Hence, you must keep at 30% to maintain a good credit score.
Credit History Duration - 15% of Your Credit Score
It refers to the repayment duration and the timely repayment of credit in due time. If you have credit with a long repayment tenure and repay it in due time, it will increase your score.
New Credit Applications - 20% of Your Credit Score
When you apply for a new credit, it affects your credit score. If you have applied for multiple credits in a short duration, it indicates that you over-rely on credit, which will lower your credit score.
Key Takeaways
Good Credit Score
Having a credit score between 700 and 750 is considered to be a good credit score.
Check Score Regularly
Checking your credit score regularly enables you to improve it and get a lower interest rate when applying for a new credit.
Factors Affecting Credit Score
If you miss or delay a payment or have a high credit utilisation ratio, it will affect your credit score
Improve Credit Score
Make on-time payments, maintain CUR below 30% and diversify your credit to improve your credit score.
Benefits of Good Credit Score
Having a good credit score will empower you to get credit at lower interest rates, better insurance premiums and proper financial planning.
FAQs
You can use INDmoney's credit score tracker to monitor your credit health and get an overview of your financial planning. It is the best way to track your credit score and improve it to meet your financial goals.
You can increase your credit score by paying the credit dues on time, regularly checking the credit reports and avoiding opening many credit accounts in a short duration.
CIBIL calculates your credit score by collecting data from financial institutions, like credit history, usage, CUR, duration and management of your credit.
Yes, INDmoney's credit score is free of cost. We help you to manage your finances in a better way.
A credit score between 700 and 750 is usually considered a good credit score. It will enable you to get credit at an affordable interest rate and favourable terms and conditions.
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