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A credit score is a 3-digit numerical value depicting your creditworthiness. It ranges between 300 and 850 and summarises your credit report, history, and rating. Your credit/ Credit Information Bureau (India) Limited (CIBIL) score is calculated by Experian Credit Information Company of India Private Limited and available as online credit score.
Your Credit Score score primarily depends on factors like-
New debt
Credit or repayment history
Credit mix
Credit utilisation ratio
When you apply for a loan, your credit score acts as a marker of your credit discipline. The CIBIL report helps the lender with your credit score information summarising your credit accounts, amount of credit used, the amount owed, number of hard credit enquiries, credit tenures, and whether bills and loan instalments are timely paid.
The higher your Credit score, the better your chances of loan approval. Typically, a credit score over 750 is considered excellent by lending institutions.
If you don’t have a good credit score, you can bring your credit score up in a matter of months with disciplined credit and repayment behaviour. Check your online credit score and maintain a healthy credit score through-
Consistently pay your loan Equated Monthly Instalments (EMIs) and credit card bills on time. A credit report free of EMI defaults and late payments perks up your credit score.
Regularly check your online credit score and CIBIL report to check for any discrepancies and understand your potential loan eligibility.
Your online credit score should have a healthy mix of unsecured and secured credit. Here, the lesser unsecured loans you have active, the better your credit score.
Your credit utilisation on your credit card must be 30%-35% or lower than your current credit limit. However, not using your card at all can also lower your credit score.
Before applying for a new loan, check your credit history online. Credit score can reduce if you service multiple loans simultaneously and apply for new credit as well.
As a new customer, to get online credit score, input your first name and last name, date of birth, gender, email ID, PAN number, mobile number, address, state, city, and pin code.
In the credit score check online process, confirm that all your details are correct. Click on ‘Submit’. Get your online credit score and credit report for free with Tata Capital.
As an existing customer, find your credit score; check your report online as well by providing your registered mobile number. Use the OTP to check your online credit score.
If you repeatedly miss your credit card bill payments, your credit score will take a hit. Delinquency in repaying credit card debt reflects badly on your CIBIL report.
Your credit report shouldn’t depict that you are servicing higher number of unsecured loans. Not having a balance between unsecured and secured credit will drop your credit score.
If you apply for multiple loans, your credit report presents you as credit hungry and someone carrying a substantial loan burden. It hurts your credit score.
Taking too many credit cards will increase your credit utilisation ratio (CUR) and negatively display on your credit report. Here, the CUR directly affects your credit score since it indicates the amount you currently owe against your overall credit limit. High CUR lowers your credit score.
A high credit limit means a higher debt burden, which negatively impacts your credit score. Not using your credit card
If you don’t use your credit card at all, your credit score falls. Consistently using credit cards under your credit limit and diligently paying bills is key to a positive credit score and CIBIL report.
A good credit score improves loan eligibility, loan approval chances and increases your likelihood of landing competitive loan terms. Check your online credit score for free with Tata Capital.
Let’s look at some benefits of credit score above 750.
The credit score range in India starts from 300 and ends at 900. The closer your credit score is to 900, the higher your chances of getting your loan approved at attractive interest rates.
The credit score range is further divided into credit score categories of NA/NH, 350-549, 550-649, 650-749, 750-900.
Check your online credit score for free with Tata Capital.
| CIBIL Score Range | Meaning |
|---|---|
| NA/NH | The credit score signifies “not applicable” or “no history”. This online credit score means you either haven’t taken a loan or used a credit card and have no credit history. |
| 350 – 549 | If this is your online credit score, it is considered bad and you’re highly unlikely of getting a loan sanctioned. Your CIBIL report will have late payments of credit card bills and EMIs, or loan defaults. A poor credit score identifies you as a high-risk borrower who may turn into a defaulter. |
| 550 – 649 | This range of credit score is considered fair. The online credit score depicts that you are struggling to clear your dues and monthly instalments on time. Here, your credit score and credit report may qualify you for loans at steep interest rates. |
| 650 – 749 | Your credit score is considered decent. With good credit behaviour and disciplined repayment habits, take your credit score up. Lenders will check your online credit score and consider your loan application. However, at this credit score you may not receive the most favourable loan terms. |
| 750 – 900 | This is an excellent credit score range. The online credit score indicates that you have regularly repaid your loans and cleared pending credit card dues on time. With your credit report, you’ll be considered a low-risk borrower. Lenders will perform credit score check online to offer more competitive interest rates and bigger loan amounts. |
The credit score is calculated by the credit bureaus in India. There are four types of credit bureaus - CIBIL TransUnion, Experian, Equifax, and CRIF High Mark. Lenders - banks, financial institutions, and non-banking financial companies (NBFC) - rely on the three-digit scores computed by these institutions to analyse the borrower’s creditworthiness.
The bureaus consider multiple factors while computing an individual’s credit report, and each criterion has its level of impact on your score. Here are some important factors:
Type of credit you use
Credit age
Payment history
Credit utilisation
The credit score usually ranges from 300 to 900, with 900 being the highest score. Generally, 750 is an ideal score to become eligible for a loan. With a higher score, you can avail of a higher loan amount, lower interest rates, and better loan terms.
Check your credit report to know your credit score and determine your current credit position. Various credit agencies compute your credit score based on your borrowing and liability history. If there are any inaccuracies or errors, they will negatively impact your credit score. Hence, regular monitoring will help improve your credit profile.
Knowing what hurts your credit score is important to improving your overall credit report. Missing payment dues and accumulating unpaid debt over time can negatively impact your score. But do you know what hurts your credit score apart from missing payment deadlines?
Here are some other factors that can poorly impact your credit score:
Filing for bankruptcy without understanding how it affects your score.
Creditors charge off an account when they feel the debt is unlikely to be collected. Having the status of your account charged off because of irregular payments can affect your score negatively.
Ignoring your loan and credit card bills over a significant period.
Not making timely repayments to third-party debt collectors will bring your profile in poor light and also affect your score.
Frequently late credit card repayments.
Closing a credit card with an outstanding bill amount is similar to exhausting your credit limit. The credit limit drops to zero, affecting your score poorly.
Limiting yourself to only one credit card for a long period lowers your credit score. Hence, it is advisable to always maintain different loans or credit card debts and repay them consistently.
Failing to check your credit reports from time to time to fix any errors or inaccuracies can hurt your score. This is important because credit bureaus can sometimes make mistakes constructing credit reports. Hence, checking your score regularly will give you a good idea of your credit profile.
The credit bureaus calculate an individual’s credit score after considering factors like credit history, repayment behaviour, credit exposure, and credit type, among other factors. There are four credit bureaus in the country: TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. These credit agencies are licensed by the Reserve Bank of India (RBI).
The calculation of credit score by each credit bureau is different according to its criteria and method used. However, the following factors are commonly considered by all credit agencies:
It is understood that when applying for a loan, lenders check your credit score and credit report. However, knowing what is the difference between credit score and credit report is essential.
Here’s a simple explanation if you are wondering - is credit score and credit report the same thing?
Credit score is a three-digit number provided by credit bureaus of the country. This qualifies you for loans, credit cards, mortgages, apartment rental, and more. A higher score will reflect a positive credit history. This will allow you to enjoy competitive interest rates and better bargaining power with a lender. Financial institutions use these scores to analyse the loans you qualify for, decide the interest rates, credit card limit, and more.
Credit report is a detailed statement of your credit history and your current financial situation, like your repayment history and the current status of your loan accounts. For instance, when you leave your credit account unattended or if repayments are not on schedule, it negatively impacts your credit reliability. Credit reports contain your personal information like - credit accounts, recent enquiries, loan rejections, account balance, payment history, and more.
Hence, the highlighting difference between credit score and credit report is that - a credit score defines your creditworthiness, whereas a credit report defines your credit reliability and spending behaviours.
A credit bureau is an agency creating credit scores by collecting and analysing credit data, including credit cards used, loans taken, overdraft facilities, etc., associated with people or business entities.
Your credit score is calculated based on your credit history, repayment records, and other credit information in your credit report.
So before approving a loan, lenders use your score to measure your creditworthiness as a borrower. Telecom companies use your report and score to verify your details and gauge your ability to pay post-paid bills timely.
Your PAN is unique and is linked to all your financial transactions. Credit bureaus use your PAN as a unique identifier to locate your credit information in their records. This is why you need to provide your PAN to check credit score.
Enter your PAN and get your free credit score check online with Tata capital
Yes, some types of inquiries can affect your score.
When you apply for a credit card or a loan, lenders perform a credit check, which reflects in your credit report as a hard inquiry. Hard inquiries can decrease your credit score.
However, employer credit checks and self credit checks are soft inquiries and do not affect your score.
Tips for a good credit score:
No, they are different.
CIBIL is one of the four major credit bureaus in India. Each credit bureau records your credit information and uses its own algorithm to calculate your score. The score generated by CIBIL is the most accurate and reliable. Hence, you may see the terms credit score and CIBIL score used interchangeably.
The credit score is set by the Reserve bank of India (RBI), ranging from 300 to 900, with 900 being the highest. There are various credit bureaus, Experian and CIBIL TransUnion being among them.
Experian and CIBIL TransUnion are well-known credit information companies approved by the Securities and Exchange Board (SEBI). They provide detailed credit reports that aid various lenders and borrowers in making informed decisions. A credit score of 750 and above is considered suitable for CIBIL and Experian.
Some points of distinction:
In 2015, the Reserve Bank of India (RBI) issued guidelines that all financial institutions and credit-providing institutions must become members of any of the four credit bureaus, namely, TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. Hence, both Experian and CIBIL are reliable credit information companies.
About 90% of financial institutions and companies have tied up with CIBIL. This makes CIBIL score more reliable and accurate when applying for a secured and unsecured loan.
Both CIBIL and Experian credit scores range from 300 to 900. Credit scores above 700 are considered good, and scores above 750 make you eligible for most loan types.
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