The credit score is a three digit number and is a numeric summary of credit history. The credit score is calculated based on the credit related activities like loans and credit cards availed, repayments, credit mix and so on. The credit score ranges from 300 to 900 and is a prime factor in the sanctioning of loans.
The credit score is derived from information submitted by banks that comprises of a list of all payments, details of approved/rejected applications for loans and credit cards, credit card limit and credit utilization ratio and the status of the credit accounts.
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Credit score affects your loan application approval and also terms and conditions that banks offer. A good credit score helps qualify for lower interest rates on credit cards and also better terms on your loans. A credit score ranging from 700 to 750 is considered to be a good score, but the bank sometimes conducts an enquiry before sanctioning loans to individuals with this score.
A Credit score that ranges from 750 to 900 is considered to be an excellent score. A person with this score is generally considered by banks for loans and credit cards as there are fewer chances of defaults. A credit score in this range also places you in a better position as you are eligible to get lower rates of interest on your loans.
See Also: Check Credit Score Online
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The credit score generally ranges from 300-900. The closer your credit score is to 900, the stronger the credit profile. Given below are the credit score ranges that are considered good by lending institutions:
It is a chart that denotes the various credit scores and the categories in which they are placed like excellent, good, fair, poor and bad credit. Summarized below is the numerical range of various credit scores:
CATEGORY |
RANGE |
EXCELLENT |
750 AND ABOVE |
GOOD |
700 TO 750 |
FAIR |
650 TO 699 |
POOR |
550 TO 649 |
BAD |
550 AND BELOW |
Given below are some simple steps that help improve and maintain a good credit score:
See Also: Why You Need To Check Your Credit Report?
A credit report contains the summary of loans and credit cards availed. Financial institutions like banks and NBFCs look at credit report to determine credit worthiness and take effective lending decisions. Credit reports are important and contain detailed information on loans and credit cards, late payments (if any), bankruptcies and track record of repayments. It contains personal information, contact information, employment information, accounts information, enquiry information and so on. Lenders believe credit report to be important for sanctioning loans.
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