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  • Know About Credit Score and How is it Calculated?

    A credit score can be defined as a 3-digit number between 300 and 900 that describes the credit merit of a credit card holder or of an individual who has taken a loan. In order to grant a loan in India, the potential lenders use the credit scores calculated by CIBIL TransUnion, Experian, Equifax or CRIF High Mark. Several lenders consider CIBIL score to be the benchmark for granting a loan to a borrower. Credit scores help to depict the credit and repayment history, utilization of credit, tenures of previous debts, and so on. Although the banks in India have their individual limit to grant loans, your chances of getting a loan approved is higher if your credit score is 900.

    A credit score is a representation of your creditworthiness in a numerical format. It is calculated by the four credit bureaus in the country- TransUnion CIBIL, Equifax, Experian Credit Information Company and High Mark Credit Information Service. Each credit bureau has its own proprietary algorithm they use to compute credit scores. They take into consideration several factors including credit history, repayment behaviour, among others, at the time of calculating the credit score

    A credit score falls in the range of 300-900. If your credit score is closer to 900, you will have better chances of getting a good deal at the time of applying for a loan or a credit history. Majority of lenders like banks and non-banking finance companies consider a credit score of 750 and above as ideal.

    Credit Score and How it is Calculated?

    A credit score is a 3-digit number that ranges from 300-900. It is calculated by the credit bureaus in the country. Generally, lenders like banks and non-banking finance companies (NBFCs) consider a score of 750 and above as ideal. Each credit bureau uses its own algorithm to compute credit scores. It is calculated after taking into consideration factors such as payment history, credit utilisation, credit age, and credit type. Let’s take a look at all of these factors in detail with the level of impact they have on your credit history and score.

    • Payment History - High Impact:
    • Payment history is one of the most important factors that affects your score. If you have been consistent in paying your bills/loan EMIs, it suggests that you are a responsible borrower and are at a lower risk of defaulting. A responsible credit behaviour will also make you eligible for preferential rates on loans and quicker approval on your applications. Making late payments, missing payments, etc. Will lower your score by several points.

    • Credit Utilisation Ratio - High Impact:
    • Credit usage is the second biggest factor that affects your credit score. A credit utilisation ratio refers to the total amount of credit you have used in proportion to the cumulative total credit limit available to you. Credit utilisation ratio is calculated by diving your overall outstanding balance by your total credit limit. According to experts, consumers should ideally use only 30-40% of the credit limit to maintain a high score.

    • Age of the Credit - Medium Impact:
    • To better assess your creditworthiness, your history with credit is also considered when computing your score. If you have handled your credit in a responsible manner in the past and continue to service payments on time on your active credit lines, it will positively affect your credit score. A long credit history helps lenders take a sound decision on whether to offer you credit or not. Therefore, it is advised to keep credit cards with a long history open compared to cards you have recently acquired.

    • Total Accounts - Low Impact:
    • It is important to maintain a good balance of secured as well as unsecured credit. A credit card is an example of unsecured credit while a secured credit can be a car loan or home loan. A mix credit helps to boost your score. Although, it has a lower impact compared to other factors, you should not ignore it. Your total accounts reflect the experience you have with handling both types of credit. You should avoid borrowing only one type of credit in large quantities as it could hamper your score.

      Along with the type of accounts, your credit inquiries (hard inquiries) are also taken into consideration while calculating your score.

    It is advised to check your credit score on your own before applying for a loan. You can check your credit score for free on BankBazaar.

    Free Credit Score and How it is Calculated?

    7 Steps to Follow to Improve your Credit score

    Your Credit score is a three-digit number that reflects your credit history. The report is prepared by various credit agencies based on the information provided by the lenders. The data or information is utilised by the agencies to prepare the report. This may include your payment history, number of credit accounts, and the length of your credit, among others. Banks and other financial institutions consider this score before giving you a loan or credit card.

    Any score above 750 is considered as a good score. So, if you don’t have a good Credit score, lenders may shy away from giving a loan. Here’s how you can improve your score.

    Best Ways to Improve your Credit Score

    There are multiple ways to improve your credit score. Here’s some of them:

    1. Check your Score Report to Spot Errors and Rectify Them
    2. Is your score trending downwards though you have a good payment history? It could be because of an error in your report. For instance, it may happen that you have cleared one of your loans but it’s still reflecting in your report. This may hurt your score a tad bit. Hence, it’s advised to go through your report periodically. If you spot any discrepancies, bring it up to the credit agencies. Eliminating such errors can boost your score.

    3. Maintain Older Credit Cards
    4. Continue using your older card to have a stronger and lengthier credit history. Of course, if you find that it’s getting difficult to make timely payments, you have no other option but close the card. Remember that a credit card account, which you have been maintaining for over a period always helps to boost your score.

    5. Make Timely Repayments
    6. Your score will take a hit if you don’t repay in due time. Every time you default, it gets recorded in your report and eventually hurts your score. Always remember that your creditworthiness reflects your repayment history. Hence, to improve your score, keep making timely payments.

      One way to deal with this is by setting up standing instructions. In that way, you won’t miss the repayment dates.

    7. Try to Have Different Forms of Credit
    8. Maintain a healthy mix of secured and unsecured loans to be on the safer side. Multiple unsecured loans can have a negative impact on your score. Now here’s an important factor that you need to remember. In case you haven’t borrowed money before, you won’t have a credit history and that may have an adverse effect on your score. And without a good score, you will find it difficult to get a loan from banks.

    9. Avoid Racking Up Debts
    10. The number of loans against your name can have an impact on your score. Hence, it’s recommended to take one loan at a time. Clear it off and take another loan. Also, ensure not to over-utilise your credit card. As in, keep the utilisation ratio between 20% and 30%. This will help you make repayments comfortably without any financial pressure.

    11. Negotiate your Credit Card Limit with the Bank
    12. As mentioned earlier, your credit utilisation ratio can make or break you financially. If you over-utilise, your score may drop. You can get in touch with your bank to customise your credit limit based on your expenses.

    13. Go for Long-term Loans
    14. The interest rates are lower for long-term loans and so are the EMIs. It will make it easier for you to make repayments and minimise the chances of defaulting. However, note that you will be paying more as interest for long-term loans compared to short-term loans.

    How Inquiries Affect Your Credit Score?

    The advantages of having a good Credit score

    Your Credit score plays an important role whenever you apply for a loan or credit card. Here’s how it is advantageous to have good Credit score.

    • Get Loan Approvals Qquickly
    • Every financial institution will check your score before granting you a loan. If you have a good CIBIL score, the lender will consider you as a low-risk customer. This automatically betters your chances to get a loan.

    • Get Attractive Rates on your Loan
    • If you have a very good score, say above 800, the lender may choose to offer you impressive rates on your loan. Having a good score puts you in the good books of the financial institutions. That way, you can negotiate the available rates and get a good deal.

    • Get Access to Credit Cards
    • Most financial institutions will check your score before giving you a credit card. So, if your score is on the higher side, getting a card won’t be that difficult. That’s because your credit history will show all the timely repayments you have made against your card or loan. And banks prefer customers who diligently pay their dues on time.

    So, check your Credit score periodically to see if you need to work on your score. If you are falling short of the 750 mark, you can apply the above tips to boost your Credit score.

    News About Know about Credit Score and how is it calculated?

    • Mcleod Russel Shares Tumble on Ratings Downgrade by ICRA

      Owing to the credit ratings downgrade by ICRA, Shares Mcleod Russe of l hit a 52-week low of Rs.19.80. The credit rating agency downgraded the company’s long-term rating from ICRA AA- to lCRA A. Meanwhile, Mcleod Russel’s short-term ratings were downgraded from ICRA A1+ to ICRA A2+ with a long-term negative outlook.

      The ratings were downgraded by ICRA as a result of deterioration in the company’s profitability on account of lower price realisation on tea. This was mainly due to the rising production costs that have kept the capital structure stretched and debt coverage indicators under pressure. ICRA has also moved the ratings to the 'Issuer Not Cooperating' category due to non-submission of monthly 'No Default Statement' (NOS) by the entity. The rating is now denoted as ICRA B- (Negative)/ICRA A4 ISSUER NOT COOPERATING, the company added.

      20 June 2019

    • ICRA: Small finance banks expected to grow at 25-30%

      A latest report from the credit rating agency ICRA has revealed that small finance banks (SFBs) are likely to grow at 25-30% over the medium-term. The report added that the growth is possible if SFBs can arrange additional external capital of Rs.4,000-Rs.6,000 crore till FY23. 

      The operating expense ratio of the bank deposits has been high mainly due to factors like setting up and upgrade of existing branches, systems upgrade, and the hiring of manpower. These banks have witnessed growth in assets under management, deposits, and better return on their equities, besides mitigating business risks through diversification. The banks reported an annualised growth of 33% in the asset under management by December 2018 which stood at Rs.64,325 crore. 

      ICRA added that it expects SFBs loan portfolio to grow at 25-30% over the medium-term. Meanwhile, the microfinance share has been declining to around 40% by March 2020. The SFBs would require external capital of Rs.4,000-6,000 crore till FY23 for meeting the projected growth rate. The credit rating agency also stated that these banks were able to diversify their product mix, which resulted in a decline in the share of microfinance as an asset class to 44% as of December 2018 from 60% as of March 2017. 

      These banks have made good progress with deposits, accounting for more than half of their total borrowings as of December 2018. These banks' asset quality indicators have improved with gross NPAs declining to 5.8% as of December 2018 from 9% in March 2018. 

      18 March 2019

    • CARE revises Kesoram Industries rating

      Credit rating agency CARE has revised the ratings of Kesoram Industries. The ratings have been downgraded owing to “significantly higher than envisaged losses” in the first nine months of FY19. The ratings were downgraded as the losses had further weakened the credit and financial risk profile, added the credit rating agency. Kesoram’s long-term facilities were revised from CARE BBB to Care BB+ with “under credit watch with developing implications. Meanwhile, the short-term facilities were revised down to A4+ from A3+, under credit watch with developing implications. BB indicates instruments having moderate risk of default. 

      CARE downgraded the ratings on Friday when Kesoram Industries informed Securities and Exchange Board of India (SEBI) and the stock exchanges that Kumar Mangalam Birla, chairman of Aditya Birla Group wanted to become a public shareholder by shedding the promoter tag.  

      18 March 2019

    • Credit rating agencies are scrutinising more companies after the IL&FS fallout

      Post IL&FS debt fraud, credit rating companies have put several companies under ‘rating watch’ in the past one year than in the last 12 years, according to a report from the Economic Times. The IL&FS fiasco has increased the concerns of the company's financial health. Last year, a number of housing finance companies suffered crisis owing the IL&FS crisis. As per data from the Securities and Exchange Board of India (SEBI), the total worth of corporate bonds under ratings watch has touched Rs.10 lakh crore in FY19 and now constitutes nearly 10% of the total corporate debt. In 2017-18, corporate bonds worth Rs.2 lakh crore were put under ratings watch.  

      Sectors like non-banking finance companies (NBFC), real estate and construction have come under tremendous pressure and are therefore being put under watch by credit rating agencies. Post the IL&FS crisis, rating agencies have become strict and started taking action.  

      9 March 2019

    • FDI inflows were at the highest level in October in India

      Rupee depreciation to a record low level has resulted into a rise in the Foreign direct investment (FDI) in India. In October 2018, the country’s FDI was at the highest level in six months as the benchmark stock index declined. As per the latest data from the Reserve Bank of India (RBI), Gross FDI inflows were $6.54 billion in October, the highest since $6.7 billion in April. Fall in the equity market and opportunistic buying doubled with the weakening rupee were some of the main reasons, India witnessed high gross FDI inflows in September and October, said Saugata Bhattacharya, chief economist at Axis Bank. In addition, there were a couple of large corporate acquisition deals in the previous months and possibly some early IBC (Insolvency & Bankruptcy Code) resolutions. The rupee became Asia’s worst-performing currency on 11 October 2018 as it hit a record low of 74.48. However, this meant that a single dollar would have fetched more of the local currency, making sense for multinational companies to bring capital into India where they have units. Madan Sabnavis, chief economist at CARE Ratings stated that FDIs come based on opportunity and availability of investible funds. India still is fast growing with hospitable FDI rules, and the country offers better prospects especially for the long term. In November, the World Bank said India had climbed 23 positions in its Ease of Doing Business Index to 77th p

      9 January 2019

    • Bank of Baroda relying on CIBIL score to control retail NPAs

      In a bid to control defaulters, Bank of Baroda (BoB) is being extra careful of it retail customers. Over 50% of the bank’s home loan borrowers have minimal risk with high credit scores. Moreover, it is also offering the lowest rates in the market at present thereby giving a tough competition to the bigger banks like State Bank of India and HDFC Ltd. Bank of Baroda was one of the first banks to base the interest rates for home loans on the Cibil scores. The rate of interest varied from 8.65% to 9.65% depending on the CIBIL score. Thanks to the tighter norm of checking the CIBIL score, BoB has improved its portfolio. The bank had 57% borrowers with a CIBIL score of 760 and above. Retail loans at BoB were growing at 33.55% over the previous year. There was an exponential increase in the auto personal loans as both of them registered an increase of 39% as on half year ended September 2018, as compared to the previous year. The bank expects to grow at a similar pace in the second of the fiscal. The total retail non-performing assets (NPA) of the bank are at Rs.1,827 crore, which is 2.40% of its total NPA pool. This is an improvement from March 2018 when the bank's retail NPAs were 2.83% of the total NPAs.

       

      In the first 6 months of FY19, BoB has 75% of new customers with a CIBIL score of 760 and above, said Virendra Sethi, general manager in charge of retail loans at BOB. In addition, Bank of Baroda is also

      Working on expanding its education loan portfolio and has reported a 24% rise in sanctions. The highest growth in this segment is seen in loans to students from premier colleges and loans to fund their studies in foreign countries. The total outstanding retail loans of the bank at the end of September 2018 was Rs.76,252 crore, of which home loans were at Rs.49,345 crore, auto at Rs.6,660 crore and education loans at Rs.2,285 crore

      27 December 2018

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    Credit Report Reviews

    • Experian Credit Report
      "nice"
      0.5 5.0/5 "Blown Away!"
      Good place to take personal loans and credit cards, fastrack applicationds but simply rejecting applications what the purpose my crdit score is 816 i did not got at least single prpproved they are continl distrub us for uploading but no use
      Was this review helpful? 32
      ,
      Reviewed on Aug 21, 2019
    • Experian
      Experian Credit Report
      "Good place to take personal loans and credit card"
      0.5 2.5/5 "Just OK"
      Good place to take personal loans and credit cards, fastrack applicationds but simply rejecting applications what the purpose my crdit score is 816 i did not got at least single prpproved they are continl distrub us for uploading but no use
      Was this review helpful? 33
      ,
      Reviewed on Aug 14, 2019
    • Experian Credit Report
      "CT"
      0.5 5.0/5 "Blown Away!"
      I am using KOTAK MAHINDRA bank urban credit card for more than 4 years. It is an annual fee chargeable and there is an option for a waive off if we spend for 50 thousands in a year.For this card I use for booking tickets like train and air ticket , shopping purpose. So based on the usage I have not get reward points and cash back yet.
      Was this review helpful? 72
      ,
      Reviewed on Jul 11, 2019
    • Experian Credit Report
      "Test Review For CT"
      0.5 4.5/5 "Excellent!"
      OEJHPNETVIWEVVHZFYBHEFWQZAUGPYNLVKXOHPEMZTXMAFHKVUFHMPSEKUFQRIWHKEUVYPFMHCKHQGOSJXJXQPVGYOJRCCKRRSNWLGVLRJBSRLIJLJVZTOWCGGFLBBXJWDUDWATLCKBNABXLPGDZGSTTIXIUVWUTPZQBMWFMPUQPQRGZQGLBDJHYEGQHACNJEJKHQNRGQBGEKYPQQC
      Was this review helpful? 82
      ,
      Reviewed on Jul 04, 2019
    • Experian Credit Report
      "Need to provide reward points and cash back"
      0.5 5.0/5 "Blown Away!"
      I am using KOTAK MAHINDRA bank urban credit card for more than 4 years. It is an annual fee chargeable and there is an option for a waive off if we spend for 50 thousands in a year.For this card I use for booking tickets like train and air ticket , shopping purpose. So based on the usage I have not get reward points and cash back yet.
      Was this review helpful? 94
      ,
      Reviewed on Jun 26, 2019
    • Experian Credit Report
      "Good card"
      0.5 5.0/5 "Blown Away!"
      In Axis bank, i don't get any offers. 2 years ago, i have started using the card and my credit limit very good which is Rs. 90000 after the usage, they have reduced upto Rs. 42000 and every six month they are enhancing the limit. They are not sending the offers hence i'm planning to close the card by next month since lots of cards are not required.
      Was this review helpful? 86
      ,
      Reviewed on Jun 24, 2019
    • Experian Credit Report
      "SBI bank Credit card"
      0.5 4.5/5 "Excellent!"
      I came SBI card through bank bazar online, I want a best credit cards for me , in bank bazar website I found a SBI card based on my credit score & this card are give me best rewards points , I'm using this card from 2 year & I give best thankful to bank bazar because his customers service is superb.
      Was this review helpful? 105
      ,
      Reviewed on Jun 11, 2019
    • Experian Credit Report
      "CREDIT REPAIR "
      0.5 5.0/5 "Blown Away!"
      I need to share my experience how I evicted all collection on my report. I paid off my hospital bills from the collection agency that the hospital sent me to and the collection refuse to remove from credit. I am trying to get a house. I have called the collection agency and they didn't remove it, so what do i do. It paid off and i want this collection remove. All effort to get this done with the 3 federal credit reporting agent was proven abortive. I did some research and found this credit repairer Global Technologies. I sent a mail to his G mail (globaltechnologies46 at G mail com) how he could get me out of these mess!! He replied and explain in details how he will evict all collection on my report. He did a wonderful job for me.
      Was this review helpful? 112
      ,
      Reviewed on May 10, 2019
    • Experian Credit Report
      "Credit Report"
      0.5 4.5/5 "Excellent!"
      Credit Report is providing a ease way to understand my cibil score and it is providing me an opportunity to apply for n number of banks. It is super good and i find it very cool and comfortable. Having perfect design, user friendly and accurate with more information..
      Was this review helpful? 141
      ,
      Reviewed on May 08, 2019
    • Experian Credit Report
      "Review of Credit Report"
      0.5 5.0/5 "Blown Away!"
      The credit report gives an excellent indication of my credit situation. The reports are updated with a lag. So, the exact credit situation is only reflected after a couple of months. Nevertheless, experience is good. The graphical representations are also good.
      Was this review helpful? 138
      ,
      Reviewed on May 04, 2019
    • Experian Credit Report
      "Ease of use, quick access and detailed report"
      0.5 3.5/5 "Pretty good"
      Recently I was about to apply for a loan and found bankbazaar through a search engine. Wanted to check my eligibility and credit score before i wanted to proceed further, Bankbazaar made it easy as they have all solutions in one platform. Im extremely satisfied with the services.
      Was this review helpful? 143
      ,
      Reviewed on Apr 30, 2019
    • Experian Credit Report
      "Credit Report"
      0.5 5.0/5 "Blown Away!"
      Awesome Service on credit report which is updated all the time. Very accurate and perfect. I could check and apply for various financial products. Keep it Up Bank Bazaar Team........................................................
      Was this review helpful? 132
      ,
      Reviewed on Apr 30, 2019
    • Experian Credit Report
      "Credit Report"
      0.5 4.5/5 "Excellent!"
      It was a great experience to fetch credit report through you guys . now i receive my monthly report which helps me track my credit status. This report helped me to apply for different financial products through bank bazaar. I happy with you guys.
      Was this review helpful? 123
      ,
      Reviewed on Apr 30, 2019
    • Experian Credit Report
      " My credit card is not show my security is very good"
      0.5 5.0/5 "Blown Away!"
      Credit card is not show my credit card is very good please help my credit card I have interest credit card please give me credit card I have happy it card miss you me please credit card me I have not credit card please give me credit card thanks give me card
      Was this review helpful? 122
      ,
      Reviewed on Apr 29, 2019
    • Experian Credit Report
      "credit report"
      0.5 5.0/5 "Blown Away!"
      It was a great experience to fetch credit report through you guys . now i receive my monthly report which helps me track my credit status. This report helped me to apply for different financial products through bank bazaar. I happy with you guys.
      Was this review helpful? 131
      ,
      Reviewed on Apr 25, 2019
    • Experian Credit Report
      "Excellent Service by Bank Bazaar"
      0.5 5.0/5 "Blown Away!"
      I could find bank bazaar to be very convenient in checking my credit score for applying any loan or an application for credit cards. Also after keying all the details the bank bazaar people wont disturb. Whenever there is an offer you will get a text regarding the information. Thanks for getting my accurate Credit score
      Was this review helpful? 130
      ,
      Reviewed on Apr 23, 2019
    • Experian Credit Report
      "Experian credit report"
      0.5 5.0/5 "Blown Away!"
      I checked my credit score in bankbazaar web site ,it has given score with in span of seconds. I wondered ,it is free of cost for checking. It is really a wonder. Congrats to bankbazaar team members . Thanks a lot once again to all bankbazaar team members
      Was this review helpful? 155
      ,
      Reviewed on Apr 05, 2019
    • Experian Credit Report
      "Realiable credit score"
      0.5 4.5/5 "Excellent!"
      I checked my credit score in bank bazar website. It gave instantly with all my banking past history. It was very much useful. It helped me know my credit status report at no cost . It only required few hassle free clicks and that over.Really appreciable!
      Was this review helpful? 162
      ,
      Reviewed on Mar 24, 2019
    • Experian Credit Report
      "Credit Score Tracking"
      0.5 4.5/5 "Excellent!"
      I am using bank bazaar features from last few years. Service provided by bankbazaar is good when compared to others in the market . Customer service is good and their response is good. One step solution for all you banking needs . A periodic tracking of your credit score is maintained well and kept updated in email as and when new scores arrive .
      Was this review helpful? 174
      ,
      Reviewed on Mar 08, 2019
    • Experian Credit Report
      "Very nice"
      0.5 5.0/5 "Blown Away!"
      Thanks I visited a number of sites on regards in the above matter, but what ever the response I got through bank bazar was marvellous and extra ordinary.... Thanq for providing such easy platform for getting in touch to obtain the debit cards so easily.
      Was this review helpful? 165
      ,
      Reviewed on Mar 02, 2019
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