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Credit Score India

IndianMoney.com Research Team | Updated On Tuesday, January 08,2019, 01:23 PM

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Credit Score India

 

 

What is a good credit score? Banks, NBFCs and other lenders use a 3 digit credit score to decide on loan approval. High credit score gets loans sanctioned easily. A good credit score saves on interest rates. You are in a position to negotiate with lenders and enjoy lower interest rates.

Having a good credit score doesn’t guarantee loans. It just improves chances of getting loans sanctioned. A CIBIL score is a 3 digit number between 300 to 900, which helps banks decide on sanctioning loans. TransUnion CIBIL is a credit information Company in India. CIBIL score of 750 and above is considered good. A credit information report or CIR gives history of credit behavior and contains detailed information on loans and credit cards.

Experian gives credit score between 330-830. A credit score of 750 and above is good. Experian offers credit score and credit report. IndianMoney has tied up with Experian to give free credit score.

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Credit Score India

1. Benefits of good credit score:

  1. Quick loan sanctioning: A good credit score gets loans sanctioned quickly. Maintain good credit score to process loan application.
  2. Low interest rates: Banks are open to negotiation on interest rates if you have good credit score. You get loans and credit cards at low interest rates.
  3. Home loan processing fee waiver: Banks charge processing fees, legal assistance fees, stamp paper charges, taxes and others. A good credit score helps negotiate on the fees and get home loans at cheap rates.
  4. Better balance transfer opportunities: Apart from better loan rates, banks offer top-up loans and other services on good credit score. It’s easy to switch loans and home loan balance transfer can be easily availed.

2. What is a bad credit score?

A CIBIL score below 700 is considered bad by banks and lenders. A bad credit score means outright loan rejection. Banks charge higher interest on loans if you have a bad credit score. An Experian score below 700 is bad.

If you pay minimum balance on credit cards or don’t repay loans on time, you get bad credit score. Multiple enquiries for credit show you are credit hungry. If you apply for home loans, personal loans or car loans, banks check credit score called hard enquiries. Applying for multiple loans with different banks at the same time gives bad credit score.

Try availing secured loans (Loans secured against collateral) like home loans, car loans, loan against property or loan against security. You get them at low interest rates and availing more unsecured loans like personal loans and credit cards gives bad credit scores.

Checking credit score often called soft enquiries are good. You get an idea on credit score and loans are easily sanctioned. Check free credit score.

SEE ALSO: Personal Loans For Self Employed With No Proof Of Income

3. How is credit score calculated?

Credit Information Companies like CIBIL, Experian and Equifax look into a number of factors to calculate credit score.

  • Payment history is most important for credit score. Payment history accounts for nearly 35% of credit score. Not paying dues in time means late payment fines and bad credit score.
  • Keep outstanding dues low. IndianMoney reviews say money owed comprises of 30% of credit score.
  • New credit applied affects credit score. An IndianMoney review says applying for new credit has a 10% weightage in credit score. Applying for new loans and credit cards keeps credit score low.
  • Demographics play a part in credit score. Your age, residence area and number of IDs like PAN, Voter ID affect credit score. Experian says a weightage of 10% is assigned to these factors.

SEE ALSO: IndianMoney Review: Mis-selling by insurance agents to cheat senior citizens

Factors affecting Experian credit score:

  • Age, pin code and number of IDs like Passport, PAN, Voter ID and Driving License.
  • Number of recent credit enquiries. Time elapsed since recent account opening by account type.
  • Length of credit history.
  • Total credit availed.
  • Account payment information. Write-offs, settlements and so on.

4. How to improve credit score?

  • Apply for free credit report and check credit score. If there are mistakes in credit report like loans not availed reflecting, get it rectified at once. If you have paid off loans and not closed accounts, do so immediately.
  • Never miss payments: Pay loan dues and credit card bills well in time. A delay in payment affects credit score. Pay all dues from bank account through ECS at least a week in advance.
  • Limit utilization of credit limit: Avoid utilizing credit card to full limit. Make sure monthly credit card bill doesn’t exceed 50% of credit limit.
  • Avoid multiple loans in a short time period: Too many hard enquiries affects credit score. Don’t make several new applications for credit in a short time.
  • Take help on credit score: Get free financial advice on credit score and benefits to sanction loans quickly.

SEE ALSO: IndianMoney Complaints: Cheated while buying a child insurance policy

Check Free Credit Score Online from IndianMoney:

IndianMoney has tied up with Experian to offer free credit score. IndianMoney.com is India’s leading financial education company which was formed to curb the misleading sales practices rampant in the financial services sector.

Get free credit score by entering first and last name, email ID, gender, Date of birth, address, PIN Code, City, PAN Card and mobile number.

After filling up mobile number an OTP is sent. Fill it up and tick the agreement box. Click “Get my Credit Report”. You will see credit score and credit account summary.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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