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Credit Score range: Good or bad credit scores.

The three digits of credit score fall in the range between 300 and 900. If your credit score is closer to 900 then there is a high possibility that you will get the loan easily from any bank or non-banking financial company. The credit score closer to 300 or lower than 700 depicts that there is very little chance from the bank’s end to accept your request of credit card or any other kind of loan. Here is a list of the credit score range and how it matters.

  • score between 750 and 900: The credit score which falls under 750 to 900 range is often considered as the excellent credit score. Because of your excellent credit history and credit score, you can negotiate with your lenders for a better deal and lesser interest rates on loans.
  • score between 650 and 749: Credit score which comes under 650 to 749 to be considered as a good credit score. However, banks check all the transaction history of loan applications before approving his/her loan with this credit score. You can negotiate with the bank for better deals with this credit score but you can work on improving your credit score for higher limit & lesser interest rates on loans.
  • score between 550 and 649: Credit score which falls under the range of 550 to 649 is considered as average which means you are still building up your credit history or suffering from bad transaction records in the repayment of bank’s loan. It is very hard to get a loan or credit card with this credit score.
  • score between 300 and 549: Credit score which falls under the range of 300 to 549 considered as bad credit score which depicts that you are a defaulter or had a bad re-payment history against your past loans. It is almost impossible to get a loan or credit card with this credit score.

If there are no credit score records in an individual account then it means that he doesn’t have any credit history or past loan or credit card records which depict that you are a new customer to banks or NBFSs and it is very low possibility of getting unsecured loan from banks without a credit score or CIBIL score record.

How credit score is calculated?

The credit score is calculated through various factors. Banks and non-banking financial companies or we can say potential lenders use credit score calculated by CBIL, Experian, TransUnion, Equifax or CRIF High Mark. These credit bureaus have their algorithm to calculate or to compute credit score. However in India, banks also have their criteria to grant loan other than applicant’s credit score. Credit score close to 900 is counted as an ideal credit score or more than 750 show that your possibility of re-pay the bank’s loan is excellent. Good credit score also helps in getting best deals from lenders at low interest rate for longer period.

How Cibil works?

CIBIL evaluates the customer based on the credit score. The customer’s entire credit history is evaluated and via analytics converted into a certain number which represents the risk worthiness of the customer to give credit. The score is computed in the range of 300 to 900, with 900 representing a good potential creditworthy borrower.

Any defaults in payments, cheque bounces on loans, late EMI's, etc can affect your credit score adversely. A good credit information report helps financial institutions take quick decisions on approving the loan. To ensure that your score is high, it is important to repay loans on time, process EMI and credit card repayment on time every month.

What are the factors that affect credit score or CIBIL score most?

The credit bureau or data analyst company who works on the data of a customer’s credit history has its factors and algorithms to decide or change an individual’s credit score. Some of the major factors which are subject to your credit or CIBIL score are:

  • Payment history of the borrower against the debts.
  • How the borrower is utilizing his/her credit?
  • Credit history of the borrower. A long credit history always gives a better insight into the customer to banks.
  • The types of credit you have used like a credit card, personal loan, etc. these different types of credits indicates that you can manage various type of credit at a time.
  • The credit inquiries you have made also affect your credit history more than a two-time request for credit indicates that your request is declined by the lenders because of your bad credit history so in case of rejection try after 5 to 6 months after improving your credit or CIBIL score.

Advantages of good Credit score?

  • Fewer documents will be required for loan processing.
  • More possibility of getting loan or credit score easily from banks or NBFCs.
  • Your application gets processed faster.
  • Probability of getting a lower rate of interest on loans.
  • You can negotiate with the lender for best deals.

How to improve credit score

Anybody can improve his/her credit score by following some simple steps. Although gaining a good credit or CIBIL score is not that much easy as it takes a long time to make a good credit history all you can do is planning of future budget according to your revenue sources & and by being conservative with expenditure. Some tips to improve credit score are:

  • Manage your cash outflow.
  • Refinance an existing loan to make use of lower rates of interest to make debt burden easier to manage.
  • Pay on time. Always.
  • Be disciplined about your finance. Make sure to pay all debts on time and avoid over-leveraging yourself.

Read here for best ways to improve your credit score.

How credit score report can be used?

Your credit score report gives all the details related to your credit history or credit score. It gives results in a three-digit number, and information about your ongoing loans( it could be any, personal loan or home loan) or pending credit card bills. By checking your credit report or by doing a study of your credit score report you can get the info on or can work on:

  • Your ongoing loans.
  • Active credit cards on your account.
  • Your dues to lender.
  • You credit score.
  • Analyzing your credit history to improve your score.
  • How you are performing till now against your debts.

Credit score reports can help you a lot in case if you want to improve your credit score so you can do the proper research where you are lacking. It also helps in checking the possibility of getting a loan by checking your credit score.