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:
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
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:
SEE ALSO: Credit Score India
In India, most lenders check Cibil and Experian scores. Considering this, it is good to check Cibil and Experian credit scores.
We at IndianMoney.com, offer Experian credit score free of cost. You must follow the below mentioned steps to check Experian credit score for free on IndianMoney.com:
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