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Understand Credit Score In 2 Minutes Research Team | Posted On Monday, April 29,2019, 06:19 PM

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Understand Credit Score In 2 Minutes



What Is Credit Score?

Credit score is a 3 digit summary of credit history. Credit score shows your credit worthiness. Most authorized lenders check credit score when you apply for a loan. If you have a bad credit score, then chances of your loan application getting rejected are high, unless you furnish a security or collateral.

Credit score is a three digit number from 300 to 900, with 900 being the best. If you have availed loans from authorized lenders anytime in the last 7 years, then you would have a credit score. If you have not availed a loan from authorized lenders, then you would not have a credit score.

Reserve Bank of India (RBI) has authorized four credit bureaus to calculate credit score in India. RBI has mandated all authorized lenders to share all credit related transactions with the four credit bureaus for the purpose of credit score calculation. Following are the authorized credit bureaus in India:

  • TransUnion Cibil
  • Experian
  • Highmark
  • Equifax

Credit score is based on your credit history. If you have repaid your loans regularly, then you can expect your credit score to be high. If you have missed payments, loan defaults, write-offs and settlements, then you can expect your credit score to be low.

A credit score of less than 500 is considered bad and you will find loans denied. You must furnish security or collateral to avail loans.  Individuals with credit score of more than 700 are granted loans at lower interest rates. Higher the credit score, better the chances of securing loans.

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SEE ALSO: Check Credit Score Online

Why You Should Check Your Credit Score?

Checking your own credit score is considered a soft enquiry and these enquiries are not going to affect your credit score. Hard enquiries are those enquiries which are made by lenders on your credit score, when you apply for a loan. Hard enquiries have significant impact on credit score.

Following are the major reasons why you should check credit score:

  • Loan Application Rejected: If your loan application is rejected even after furnishing the requisite documents, then the next step is checking your credit score. There are chances of loans being wrongly tagged against your name. In this case, you will have to contact the bank and inform on these loans, which you have not availed. If not, it would hamper your chances of getting loans.
  • Planning To Apply For A Loan: If you are planning to avail loans, then it’s advisable to check your credit score. If you don’t have a good credit score, then you can come up with a plan to improve it. Applying for loans with a bad credit score has high chances of a rejection. Adding to this, hard enquiries have negative impact on credit score. Hence, it’s always good to check your credit score when you are planning to apply for a loan. The fact that credit score soft enquiries are given free of cost, should encourage people to check credit scores.
  • Checking Identity Theft: By checking your credit score, you can keep a check on identity theft. Fraudsters can make use of your credentials like PAN and so on to avail loans in your name. They take loans in your name and you have to make the repayment. You would be held responsible for repaying the loan. As you are not aware of the identity theft, your credit score would take a beating, until you report the identity theft. If you are a victim of identity theft, then you must immediately inform the bank.
  • Cosigned A Loan: If you have cosigned a loan or stood guarantor, then your credit score is impacted in much the same way as that of the main applicant. If the main applicant responsible for repayment defaults, then your credit score too takes a beating.
  • Planning To Improve The Credit score: If you want to improve credit score, then it’s good to track it often. By checking your credit score, you would know where you stand and can start making efforts in reaching a targeted credit score in order to be eligible to avail loans.
  • Made A Late Payment: Defaults, late payments, and write-offs are certain to impact credit score. If you have recently made a late payment, then it’s better to check credit score and know the extent of the impact. You can plan accordingly to enhance your credit score.

SEE ALSO: Credit Score India

Which Credit Score Should You Check?

In India, most lenders check Cibil and Experian scores. Considering this, it is good to check Cibil and Experian credit scores.

We at, offer Experian credit score free of cost. You must follow the below mentioned steps to check Experian credit score for free on

  • Log on to
  • Click on ‘Get FREE CEDIT SCORE now’
  • Fill all details and validate with the OTP sent on your phone number through SMS
  • Your credit score would be displayed

 Ask The Experts: Credit-Checking Tips

  • Check your credit score at least once each quarter. Soft enquiries have no impact on your credit score, and there is no reason why you shouldn’t check it often.
  • Avoid multiple loan applications. Lenders would check your credit score each time you apply for a loan and this is called hard enquiry. Too many hard enquiries are considered a red flag and affect your credit score.
  • Check both Cibil and Experian credit scores once each quarter. This is because some lenders rely on Cibil score while the rest on Experian.

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