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Why Do I Have So Many Credit Scores? Research Team | Posted On Tuesday, January 29,2019, 03:57 PM

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Why Do I Have So Many Credit Scores?



Why Are There so Many Different Credit Scores?

The credit scores are computed by credit rating bureaus namely CIBIL, Equifax, Experian and High Mark. The process of computing credit score differs across credit information Companies.

Banks and other financial institutions submit relevant information to all four credit rating agencies. The information is then processed by complex mathematical formulas and the credit score is derived.

Your credit history is maintained in reports at different credit bureaus. All lenders don't always report information to each bureau or some of them may also consider payment of utility bills as an important parameter. So, there may be some minor discrepancy in credit score issued by credit information Companies. Banks give equal importance to credit scores issued by all credit information Companies.

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SEE ALSO: Credit Score Information: Guide to Credit Scores

Why Do I Have So Many Credit Scores?

What is a Credit Score?

A credit score is a three digit number assigned to an individual by the credit rating agencies after analyzing credit worthiness. The credit score is calculated based on the credit related activities and financial transactions. The banks and other financial institutions submit credit information to the credit bureaus each month.

The information submitted comprises of a list of all payments, details of approved/rejected applications for loans and credit cards, credit card limit, credit utilization ratio and the status of the credit accounts. Thereafter this data is analyzed through statistical techniques or algorithms and the credit score is calculated.

SEE ALSO: Credit Score Calculator

How to check the free credit score from IndianMoney: realizes the need to take command of personal finances. In order to help people, IndianMoney in association with Experian has made provisions to check Credit Report for free. You can visit and follow the steps given below to check credit score for free.

  • Click on 'Get Free Credit Score now'
  • Fill in the details required like Name, email address, gender, Date of birth, address, PAN card number and Mobile Number.
  • An OTP will be sent to registered mobile number.
  • Enter the OTP
  • Click on 'Get my Credit Report'

SEE ALSO: What Is A Perfect Credit Score?

Are there any benefits to have Different Credit Scores?

A good credit score is beneficial in many ways. Outlined below are the advantages of having a good credit score:

  • A good credit score helps qualify for lower interest rates on credit cards and get better terms on loans. This helps settle debt fast as you have to pay lower interest rates on loans.
  • A good credit score helps in quick approval of loans and credit cards.
  • The banks consider you eligible for higher loan amounts as having a good credit score proves how responsible you are with repayments.

How Do You Improve Your Credit Scores?

  • Make payments on time: Payback the outstanding dues on credit card. If you are paying the minimum due then that is not enough. Clear all your dues as early as possible to avoid a bad credit score.
  • Credit mix: Maintaining a good credit mix shows how responsible you are in managing different kinds of credit and paying off multiple loans. Credit mix has weightage of 10% in credit score. A credit mix includes maintaining credit cards and having loans like personal loan or car/home loan.
  • Maintain a good credit utilization ratio: Always keep the credit utilization ratio below 30%. Make sure not to come too close to your prescribed credit card limit often as this has negative impact on credit score.
  • Space out credit applications: Do not apply for loans at multiple banks. If your loan or credit card application is rejected do not apply immediately with another bank. Wait for a period of 6 months and then apply again.

What is bad credit score?

Credit score is a summary of the loans and credit cards availed and repayment history. Having a good credit score is important to get loan applications sanctioned.

Seeking credit with a bad credit score further lowers credit score. A credit score in the range of 300 to 500 is considered poor. A lender generally does not sanction loans for borrowers with poor credit score or they are likely to charge high interest rates.

How to increase credit score instantly?

A credit score is build over time and is a summary of repayment history. There are no short cuts to instantly increase credit score. To increase your credit score within a short time, you can use Experian Boost that helps improve credit score by taking into consideration the credit on utility and mobile bills.

Experian boost helps reflect a positive credit score and the services are completely free of cost. This will help customers with poor credit scores boost them with positive payment history. 

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