Why Should You Check Your Credit Score?

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Get detailed analysis of your credit behaviour. Fetching your CIBIL report will not affect your credit score.

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See what powers your credit score. Our expert tips will help you improve your score.

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Exciting personalised loan offers based on your credit score.

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What Is A Credit Score?

A Credit Score is a three-digit number representing a borrower’s credit behavior, that is, a history of how well you manage your credit products and will likely clear your debts. This includes the history of personal, education, home, business, or auto loan as well as credit card. Every lender, whether a bank, NBFC institution, or credit card company, refers to this score to verify the risk of lending money or extending credit to an individual.

Accredited agencies in India compile credit reports, which lenders then use to calculate credit score of an individual. The primary credit bureau in the country is CIBIL, or the Credit Information Bureau (India) Limited, which collects and maintains individuals' information from various sources like banks, financial institutions, and other lenders. Thus, credit score is also often called CIBIL score. One can quickly check their CIBIL report online by submitting basic financial details like mobile and PAN card numbers.

How Credit Score is Calculated?

CIBIL score ranges between 300 and 900. A higher score means a stronger credit profile and creditworthiness. Lenders perceive individuals with higher credit scores to have a lower default risk.

Factors like payment history, credit length, credit utilization, credit mix, and recent credit inquiries are considered when calculating a credit or CIBIL score. These criteria are assigned specific weights, and their collective assessment determines an individual's creditworthiness.

You must maintain a positive payment record and responsible credit management for a good credit score.

Why You Must Maintain a Good Credit Score?

Credit Information Companies (CICs) provide CIBIL score reports to financial institutions. Thus, you must maintain a good credit score to acquire a bank loan or credit. You must regularly check your credit score, as a higher rating helps in:

  1. Negotiating a lower interest rate on loans and credits

  2. Getting your loan application approved and processed instantly

  3. Applying for a new credit card without any hassle,

  4. Obtaining credit cards with attractive features, rewards, and benefits

  5. Waiving off pre-payment charges and processing fees in some cases

  6. Gaining greater financial flexibility and purchasing power

  7. Securing desirable rental accommodations since it proves your financial responsibility and reliability

  8. Waiving off or reducing security deposits in some instances

  9. Positively impacting your employability in industries where employers review credit scores while hiring

Maintaining a good CIBIL will build a solid financial profile and demonstrate responsible management, opening doors to better financial opportunities in the future.

Credit Score Range

Most lenders consider a 750 or above from CIBIL or any credit bureau a good credit score. Maintaining anything between 700 and 900 of CIBIL score will simplify loan or credit card application approval. The credit scores from two agencies may vary — you can have a CIBIL score of 750 or above but below 700 in another agency's report. So, keep a tab on credit scores from multiple bureaus, and preferably check it once every month. Similarly, different lenders have their own benchmark of a 'good' credit score.

That said, the following ranges generally indicate creditworthiness:

  • Excellent Credit Score — 750 and above

    These Individuals will likely have easier access to loans and credit besides a high chance of access to lower interest rates and other terms.

  • Good Credit Score — 700 to 749

    This score also signifies a solid credit profile, encouraging lenders to consider these individuals reliable borrowers.

  • Fair Credit Score — 650 to 699

    Individuals have access to credit but face slightly higher interest rates or stricter lending conditions than those with higher scores.

  • Poor Credit Score — Below 650

    These borrowers are perceived as having higher credit risk and may face challenges in getting credit or loans.

Reasons for a Low Credit Score

Various factors affect your credit score negatively. Some of these common mistakes may seem minor, but when they add up, they have a more significant impact. These are:

  • Repeated late or missed credit payments like EMIs and credit card bills
  • Defaulting on loans or credit card payments
  • Regular high credit utilization or maxing out on your credit card
  • Multiple or frequent hard inquiries on credit and loans
  • Too many open credit accounts
  • Short credit history
  • Closing the oldest credit account when you have a new one open
  • Negative remarks such as settlements or bankruptcies on CIBIL reports
  • Errors in the credit report with any agency
What are the reasons for a low credit score?
How Can The Credit Score Be Improved?

How You Can Improve Your Credit Score

Even if your credit score slips for any reason, you needn't worry, as there are ways to improve it. If you ensure to do the following, your credit score will be healthy, and lenders will perceive you as a reliable borrower:

  • Don't miss or delay paying your credit accounts, that is, EMIs and credit card bills.
  • Don't depend on your credit card overly, and keep its balance low, preferably below 30%.
  • Maintain a healthy credit utilization ratio.
  • Avoid opening too many new accounts or applying for credit cards too frequently. If you must, wait for at least months between two applications
  • Regularly check credit scores with different bureaus for errors and have them rectified as soon as possible.
  • Build a positive credit history over time by taking out a mix of secured loans, such as home and car loans, and unsecured loans, such as personal or credit cards.

Credit Score & Credit Report: How are They Different?

Credit scores and credit reports are distinct but interconnected. Credit reports provide the data to determine your creditworthiness and produce the score. Thus, these are the starting points for computing the credit score that lenders can refer to.

Credit Score or CIBIL Score Credit Report or IBIL Report
A numerical three-digit representation of creditworthiness
(e.g., 300-900 in India)
Contains comprehensive information about credit accounts, payment
history, credit inquiries, public records, etc.
Used to evaluate credit risk Used to assess creditworthiness and make lending decisions
Generated by specific scoring models Compiled and maintained by credit bureaus
Fluctuate based on recent credit activity Reflects long-term credit behavior and history
Frequently updated Updated periodically by credit bureaus

CIBIL Score's Impact on Loan and Credit Card Eligibility

CIBIL score is an essential factor that lenders consider while evaluating loan and credit card applications. Having a healthy credit or CIBIL score has many benefits.

  1. Institutions will approve your credit more readily if you have a good CIBIL score.

  2. A strong credit score makes lenders perceive you as someone with low credit risks

  3. You will enjoy more favorable loan terms and lower interest rates

  4. It enhances your eligibility for credits and provides access to better credit opportunities

  5. Improves overall borrowing capacity

  6. A low CIBIL score can result in loan rejection or limited credit card options

Why You Must Check Free Credit Score on IIFL?

Regularly checking your CIBIL score will give you a detailed analysis of your credit behavior, and it does not affect your credit report or score. On IIFL’s website, you can see what powers your CIBIL score, and our expert tips will help you improve it, too. Moreover, you can get exciting personalised loan offers based on your credit score.

CIBIL Score FAQs

While there is no fixed minimum score applicable universally, a CIBIL score of 750 or above is generally considered a good score and increases the likelihood of loan approval. Multiple financial websites offer a CIBIL check where you cen easily get your free CIBIL score.

Lenders can make informed lending decisions, manage risks, and ensure responsible lending practices by checking the CIBIL score. It allows them to evaluate the creditworthiness of borrowers and offer loans with appropriate terms and conditions.

CIBIL (Credit Information Bureau (India) Limited) does not have the authority to delete or change credit information on its own. They can make changes to your credit report based on the investigation, but they rely on information provided by lenders and creditors. If the information is accurate and valid as per the lender’s records, it may not be altered. However, if there are genuine errors, the credit bureau will correct them based on the investigation and the lender’s response.

If you find errors on your credit report, you can contact CIBIL to report them. CIBIL has its own dispute resolution procedure, which may take some time as it involves coordination between the credit bureau, lenders, and creditors. You can expedite the resolution process by being proactive, providing accurate supporting documentation, and following up with the credit bureau.

Your PAN card records your major financial transactions. If you don’t have a PAN card, there is a high probability that you haven’t availed any credit. In such a case, any credit bureau cannot generate your credit score.

No, there is no specific limit on requesting access to your credit score in India. As an individual, you have the right to check your credit score as often as you need or prefer.

No. Your CIBIL score is private information you or a select group of authorised parties can access with your permission.

Your present lenders periodically report the status of your loans and credit cards to CIBIL, and over time, your report reflects these information. As a result, if you close a loan or credit card account this month, that information can still appear on your credit report.

Usually, becoming a guarantor doesn't affect your credit score. However, if the borrower is unable to make their payments, you will be held accountable and this will reflect negatively on your credit report and score.

You can download your CIBIL report by visiting the official website of CIBIL. Enter your basic details such as name, address, contact number, and PAN details. Verify your identity using OTP authentication by clicking the ‘Get Free Credit Report’ button.

CIBIL keeps the defaulter's record in its database for 7 years for the banks and NBFCs to access. Such crucial information determines a borrower's creditworthiness.

India has four credit bureaus: CIBIL, Experian, CRIF High Mark, and Equifax. These bureaus compile credit scores and reports based on an individual's credit history, payment behavior, and borrowing patterns.

CIBIL Score is a three-digit number summarizing your credit history derived from your CIBIL report (also called CIR or Credit Information Report). This report is an individual's credit payment history across various types of loans and credit institutions over time.

CIBIL TransUnion Score 2.0 is an advanced tool from CIBIL that's updated and customized, enabling reliable and instant credit decisions. Most Indian lenders use this upgraded version to make credit-related decisions.

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