No impact on credit score ✔️Check for free ✔️Get best loan offers
Apply Now
The credit score is a three-digit figure that ranges from 300 to 900, indicating your creditworthiness, or ability to repay debts. A higher credit score reflects a stronger repayment capacity, while a lower score suggests the opposite.
When applying for a personal loan, your credit score is a crucial factor. A good score is essential for qualifying for the loan and can also lead to more favorable terms and lower interest rates.
| CREDIT SCORE/CIBIL SCORE RANGE | WHAT IT DENOTES |
|---|---|
| Less Than 650 | Poor – This indicates quite a lot of credit issues and you may need to take a good look to improve it for favourable outcomes |
| 650-699 | Average – This is close to reaching a good credit score but needs improvement |
| 700-749 | Good – This indicates a responsible credit history which may get you favourable interest rates |
| 750-849 | Great – This score shows consistency in repayment and a very good history with no defaults or penalties |
| 850-900 | Excellent – This means you are eligible for all kinds of loans because your credit history is Notices-issued-to-the-Company-by-Department-of-Telecommunications-Kolkata-West-Bengal-and-Andhra-Pradesh-Mar-28-2024 |
Your credit score is calculated by authorized credit agencies such as TransUnion CIBIL, Equifax, and Experian. It is based on your credit history, which reflects how you have managed and repaid credit in the past.
If you have a long credit history and consistently made timely payments, you’ll likely have a good credit score, making it easier to secure a personal loan with favorable terms.
Conversely, if you’ve missed payments or been late in repaying, your credit score will be lower. This could result in your loan application being rejected or being offered a loan at higher interest rates.
Make sure you have a good credit score and then getting credit becomes extremely easy.
Factors that affect credit score are as follows :
| Payment history | This is the most important factor, and it accounts for about 35% of your score. Banks or lenders want to see that you have a history of making your payments on time. |
| Amounts owed | It accounts for about 30% of your score. Make sure that you are not using too much of your available credit. |
| Length of credit history | Accounts for about 15% of your credit score, where you have to show that you have a long history of using credit responsibly. |
| New credit | This factor accounts for about 10% of your score, where lenders want to see that you are not applying for too much new credit at once. |
| Types of credit | Accounting about 10% of your credit score, banks or lenders want to see that you have a variety of credit accounts, such as credit cards and loans. |
There are many benefits to having a good credit score. Here are a few of the most important ones:
Lenders check your CIBIL score for several reasons. Listing out the reasons for you to discover the best tricks.
| Reason | Description |
|---|---|
| Assess Creditworthiness | Shows if you can repay based on past credit behavior. |
| Evaluate Risk | Higher scores mean less risk; lower scores indicate trouble. |
| Make Loan Decisions | Key factor in approving or denying loan applications. |
| Set Interest Rates | Affects the interest rate; better scores often get lower rates. |
| Determine Credit Limits | Helps decide how much credit you can get on loans or cards. |
| Prevent Fraud | Confirms your identity and spots potential fraud. |
A low CIBIL score can arise from various factors:
| Missed Payments | High Credit Utilization |
| Limited Credit Mix | Short Credit History |
| Frequent Hard Inquiries | Defaults/Bankruptcies |
Improving the credit score is important for accessing better loan terms, lower interest rates, and increased financial opportunities.
Some effective ways to help you boost your credit score:
| Method | Description |
|---|---|
| Pay Bills on Time | Ensure all loan and credit card payments are made on time. |
| Reduce Credit Utilization | Keep usage below 30% of your total credit limit. |
| Diversify Credit Mix | Have a variety of credit accounts (credit cards, loans). |
| Check Your Credit Report | Regularly review for errors and dispute inaccuracies. |
| Limit New Credit Applications | Avoid applying for multiple accounts at once. |
| Keep Old Accounts Open | Maintain older accounts to lengthen your credit history. |
| Set Up Payment Reminders | Use reminders or automatic payments for timely payments. |
| Work with a Credit Counselor | Seek advice from a credit counseling service if needed. |
A credit score is generally the numerical representation of an individual’s creditworthiness. It is a three-digit number ranging from 300 to 900 which tells about your credit accounts, total debts, repayment history, and other related information based on credit reports.
Credit score is calculated based on the following factors:
It is recommended to check your credit score on a regular basis as it helps you stay informed about your credit health. According to experts, it is good to monitor your credit score every quarter. There are several websites and apps that allow you to check credit scores for free or low cost. You must also check your credit score before applying for a new loan or credit card.
The major factors that can impact your credit score include:
Well, checking your own credit score doesn’t really affect it as it is often termed as soft enquiry. Your credit score is only affected when a lender or a financial institution checks your credit by getting the report from credit bureaus. This happens only when you apply for a loan or credit card.
Your credit score affects your loan interest rates significantly. If you have a higher credit score, let’s say 700 or above, it means you have a good credit history with great on-time payments. In such cases, lenders and financial institutions are happy to provide you with lower interest rates. However, if you have a credit score below 700, or usually below 650, lenders may consider you a higher credit risk. As a result, they may offer you loans with higher interest rates to compensate for the perceived risk.
Yes, it is very common to have multiple credit scores as there are many credit bureaus like CIBIL, Equifax, Experian, and CRIF High Mark. All of these bureaus maintain your credit report, on the basis of which they produce your credit score every month. Hence, it is always advisable to check your credit score with these important credit bureaus regularly, though CIBIL score is mainly considered by financial institutions in India.
A credit score ranges from 300 to 900 and these numbers determine your creditworthiness. Individuals having a credit score in the range of 300-500 are considered to have poor credit. While a score between 501 and 700 is considered a fair credit score, a score between 701 and 750 is considered a good credit score. People with a credit score between 751 and 900 have an excellent credit score.
Late payments or missed payments have the worst effect on your credit score as your payment history is what defines your credit score. Apart from incurring late fees and penalties, your credit score will also be lowered. However, this usually happens only when the payment is 30 days or more overdue. To minimise the impact of late payments, always strive to pay bills on time, even if it’s just the minimum amount.
Well, the negative information on your credit report, which is often in the form of late payments and defaults, cannot be removed if it is accurate and reported legitimately by the bureaus. However, there are some steps you can take if you wish to change it:
It is always recommended to keep your credit ultimatum below 30% of the available credit. Using the maximum amount from your available credit can negatively impact your score. On the other hand, having a higher total credit limit across all your accounts can be beneficial for your credit score as it will increase your credit capacity and can help keep your credit utilisation rate lower.
Absolutely, you can build your credit score without a credit card. You can avail yourself of secured loans and credit builder loans to build your credit score. You can also rely on rent and utility payments and credit builder products to establish credit.
Yes, if you have an old credit account and you wish to close it, then it can potentially affect your credit score. This is because the length of your credit history accounts for about 15% of your overall credit score. So, if your account age is shortened under any circumstance, your credit score will be impacted.
Different types of credit information can stay on your credit report for varying lengths of time. Here’s an insight for you:
If you are filing for bankruptcy, then be prepared to witness a significant drop in your credit score as bankruptcy remains on your credit report for an extended period usually up to 10 years. Moreover, after bankruptcy, you may find it challenging to qualify for new credit accounts, and if you do, they often come with higher interest rates and less favourable terms.
Yes, you can dispute errors on your credit report. Here’s what you can do: send a letter to the credit reporting agency, explain what went wrong, and provide documents to support your claim. There is no fee for disputing a credit report.
Ideally, renting an apartment should not be affected by your credit score. However, there can be cases where the landlord might ask you to show your credit report.
A soft credit inquiry takes place when you are checking your own credit score or have been provided with a pre-approved credit scheme. Whereas a hard credit inquiry takes place when you apply for a loan or a credit card.
Whenever you apply for a loan, your credit score gets depleted slightly. Therefore, it is always advised that you do not apply for loans from multiple banks in a short period of time.
Having a co-signer to help you with a personal loan or a short term loan is a great way to reduce your interest rate. It can also help when you are not able to get a loan from the bank with your own credit score.
If you have a bad credit score, then your insurance premium will definitely go higher. A low credit score means that a person is high-risk, which is why insurance premiums are also inflated.
No, it is not possible for you to transfer the credit score across countries. Every nation in the world has its own credit rating methods, which makes it non-transferable.
Getting married or divorced can impact your credit score, depending upon your spouse. For example, if they have a good credit score, it might boost yours as well when you get married. Or during a divorce, your credit score could improve because you are now separated from your spouse, who had a bad credit rating.
No, credit scores cannot be inherited. Your credit score is only based on your credit history.
It can pose a major scare to your credit score. With identity theft, the other person can completely misuse your funds, and your credit score will end up facing the brunt of all the unpaid payments or EMIs.
Yes, you can always opt out of pre-approved credit offers from banks.
When you enrol in such programs, it usually involves closing all the older accounts and creating a new one with a lower interest rate. However, it impacts your credit score because your credit utilisation ratio is increased.
A “thin file” or “no file” credit history means that you have very little or no credit history. This can make it difficult to get approved for loans and credit cards, as lenders will have less information to assess your creditworthiness.
Student loans can have a positive or negative impact on your credit score, depending on how you manage them. If you make your payments on time and in full, your student loans can help to improve your credit score. However, if you miss payments or default on your student loans, it can damage your credit score.
Yes, you can refinance a loan to improve your credit score. This is because refinancing can lower your interest rate, which will decrease your monthly payments and your credit utilisation ratio.
Credit scores can differ across credit bureaus because each bureau uses its own scoring model. However, the differences are usually small and will not have a significant impact on your overall credit score.
Your employment history does not directly impact your credit score. However, it can indirectly impact your credit score by affecting your income and your ability to repay your debts.
Here are some of the ways to establish credit for the first time: get a secured credit card, take out a small loan and repay it on time to show that you can be trusted with credit.
In ideal cases, utility bills have very little impact on your credit score. Regardless, it is important to pay your utility bills on time.
Joint accounts affect the credit scores of both account holders. If one account holder makes a late payment or defaults on the loan, it will hurt the credit scores of both account holders.
Unpaid medical bills may usually not impact your credit score. Even if it does, it might take a lot of time for it to reflect on your credit score. However, it is always a good idea to pay all your bills on time.
Credit score is a three-digit number that lenders use to assess your creditworthiness. It is based on information in your credit report, which includes your payment history, the amount of debt you have, and the length of your credit history.
A higher credit score indicates you are a low-risk borrower, making you eligible for lower interest rates, better terms on loans and credit cards, and increasing your eligibility for personal loans. Banks are usually sceptical about providing instant personal loans to borrowers who have low credit scores, as they are seen as high-risk. Low credit scores also mean that you will get higher rates of interest.
