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  • Credit Score - Everything You Need to Know

    A credit score is a three-digit number from 300 to 900 used to determine the creditworthiness of an individual. Credit scores are calculated by the credit bureaus in the country after taking into consideration several factors like the length of your credit history, repayment records, credit inquiries, among others.

    When you apply for a credit card or a loan from a bank or an NBFC, having a higher credit score may entitle you to receive further benefits such as a higher loan amount, lower interest rate and your choice of tenure to repay the loan.

    The Reserve Bank of India has licensed four credit information companies in India to calculate credit scores namely, Credit Information Bureau (India) Limited (CIBIL), CRIF Highmark, Experian, and Equifax.

    You can check your credit score for free once a year from any of the three major credit bureaus. You can check your credit score for free from BankBazaar Website. Checking your credit score does not affect your score, so it's a good idea to check it regularly to make sure there are no errors.

    Here are the steps to follow for a credit score check within 2 minutes.

    Steps To Get Your Free Credit Score

    1. Visit credit score Page
    2. Enter your first and last name.
    3. Add your mobile number and e-mail ID.
    4. An OTP will be sent to your mobile number for verification.
    5. The next step would be to verify your age.
    6. Your credit score and your report will be then displayed on the screen.

    Credit Score Range and What It Means

    A credit score in India ranges between 300-900. You should always take measures to bring your credit score closer to 900. A higher credit score increases your chances of getting a good deal on personal loan as well as credit cards.

    Know your Credit Score
    Free Credit Score

    CIBIL Score Range: CIBIL scores can range from 300 to 900, with 900 indicating highest creditworthiness. The table below highlights the various CIBIL score ranges:

    CIBIL Score Range Meaning
    NA/NH This means it is either “not applicable” or “no history”. If you have not used a credit card or have never taken a loan, you will have no credit history.
    350 – 549 A CIBIL score in this range is considered as a bad CIBIL score. It means you have been late in paying credit card bills or EMIs for loans. With a CIBIL score in this range, it will be difficult for you to get a loan or a credit card as you are at a high-risk of turning into a defaulter.
    550 – 649 A CIBIL score in this range is considered as fair. It suggests you have been struggling to pay the dues on time. The interest rates on the loan could also be higher.
    650 – 749

    If your CIBIL score is in this range, you are on the right path. You should continue displaying good credit behaviour and increase your score further.

    Lenders will consider your credit application and offer you a loan. However, you may still not have the negotiation power to get the best deal on the rate of interest for loan.

    750 – 900

    This is an excellent CIBIL score. It suggests you have been regular with credit payments and have an impressive payment history.

    Banks will offer you loans and credit cards as well considering you are at the lowest risk of turning into a defaulter.

    Experian Score Range: Experian credit scores range between 300 and 850. The different Experian score ranges are mentioned in the table below:

    Experian Score Range Meaning
    NA/NH This indicates that you have no credit history.
    350 – 549 This score range implies that you have a poor track record of payment defaults, financial management, and credit utilisation. Creditors will be hesitant to extend credit to you.
    550 – 649

    This credit score range is regarded as fair. It indicates that you have a history of payment defaults and unsecured loans.

    Lenders will view you as a risk because you could potentially default.

    650 – 749 An Experian score of 650 – 749 is considered good and demonstrates financially responsible choices and timely repayments. Lenders will view you as a low-risk borrower.
    750 – 799 A credit score in this range proves that you have an excellent history of financial management, making on-time payments, and avoiding defaults. Thus, lenders will extend credit to you.
    800 – 850 This Experian score range is the highest. It refers to a person with a credit history that is almost perfect. Financial institutions are inclined to provide you loans and credit cards because you have a low risk of defaulting.

    Who Computes Credit Score?

    The RBI has granted licenses to four credit information companies in India that are responsible for computing the credit scores of individuals. These credit information companies are TransUnion CIBIL Limited, Experian, CRIF High Mark, and Equifax.

    When you make a transaction—the one that is relevant to determine your score—banks send details about it to all four credit bureaus. Essentially, banks keep Credit Information Companies up to date about your monetary habits.

    If a bank needs to check the credit score online, they can approach any one of the bureaus. It doesn’t matter which one because all will have the same score for you– all four are equally authoritative and on par with each other.

    After receiving information from the bank, credit bureaus get down to the task of collecting more information about your financial habits from other banks and financial institutions. The credit bureaus then process this information to formulate what is called a Credit Report.

    Why Should I check my Credit Score?

    It is very important that you keep a close eye on your Credit Score. It is the best way to gauge your chances to get a line of credit.

    Another reason why you should track your credit score is to know if it dips, or if an error has been made by credit agencies while calculating your score. This will help you make timely amends.

    Why is BankBazaar Giving me my Credit Score for Free?

    BankBazaar feels that you should always be in complete command of your personal finances. In order to help you with this goal, we have made provisions for you to check your credit score for free. Knowing your Credit Score before applying for a personal loan can help greatly.

    If you have a good score, you can rest assured that your loan or Credit Card application will be processed without any hassle. You can even leverage a good score to ask your lender bank for better rates of interest and additional benefits.

    On the other hand, seeking credit with a poor score will further lower your score. Let’s not even imagine getting approval for a credit line. Hence, check your Credit Score online before you apply for a financial product. Work up the score if it’s not in the acceptable range.

    Does my Credit Score Get Impacted if I Enquire About it?

    It depends on the kind of enquiry being made. There are two types of enquiries, hard and soft enquiry. Hard enquiries send your Credit Score down by a few points, while soft enquiries do not impact your Credit Score.

    An enquiry made by an individual is called a soft enquiry. BankBazaar will make a soft enquiry on your behalf when getting your Credit Score from Experian. Hence, this will not impact your Credit Score in any manner. Moreover, you can get your credit score for free.

    A hard enquiry is when a financial institution checks your Credit Score to take a decision on your credit application. Every time you apply for a loan or a Credit Card, the lending institution checks your score. Each time a bank checks your score, your score will dip by a few points.

    TIP: If you are applying for a loan or a Credit Card, do not apply to many banks at the same time. Too many enquiries will hurt your Credit Score.

    What is a Free Experian Credit Score?

    Factors that Lower Your Credit Score

    It is understood that having high balances on your credit card can significantly reduce your credit score. Apart from that, there are several other factors that can hurt your credit score:

    • Being late on your credit payments.
    • Completely ignoring your loan dues/credit card bills.
    • Creditors charge off accounts when credit card bills are not paid on time. The status of having your account charged off is one of the worst incidents that reflect on your credit score.
    • Lenders use third-party debt collectors to retrieve the loan amount from you, in case they do not receive payments. Having your account sent to collections reflects very poorly on your credit score.
    • Filing for bankruptcy can have a devastating effect on your credit score.
    • When you request to close a credit card that has an outstanding balance, your credit limit drops to Rs.0. This is similar to a situation where you have maxed out your credit card.
    • Closing old credit cards shortens your credit history. This has a negative impact on your credit score.
    • Applying for multiple credit cards or loans within a short duration makes your credit score plunge. Hence, it is advisable to limit the number of applications.
    • Having only one type of credit account will negatively impact your credit score. So, you should look to maintain a mix of loans and credit card debts and make consistent payments on time.
    • If you fail to check your credit report occasionally and fix errors, if any, your credit score can be hurt. It should be understood that credit reporting bureaus also make mistakes when creating credit reports. If you do not monitor and correct your report, it may cost you a lot in the future.
    • It is better to have a good balance of secured as well as unsecured loans in your credit history.

    Benefits of a good Credit Score:

    If you have a good Credit Score, you can avail loans and Credit Cards faster and with ease. Check yours now!

    • Get The Best Credit Card - A good Credit Score may get you the best Credit Cards. Get a feature-loaded card and reap the benefits.
    • Quick Loan Approval - A good Credit Score works like an expressway for your loan application. Banks may approve your application quickly and readily.
    • Better Interest Rate - With the backing of a good Credit Score, you can bargain for a lower rate of interest on loans and Credit Cards.
    • Loans Made More Affordable - Loans come saddled with processing fees and many other charges. You can bargain your way out of some of these charges with a good Credit Score.

    Check your Credit Score right away and see if you are eligible for all these benefits. You can check your score on BankBazaar at zero cost.

    Why Do Lenders Check Your Credit Score Before Approving Your Loan

    A credit score is a 3-digit numeric value. This figure reflects your creditworthiness.

    A score closer to 900 is a very good score. Lenders will look into your credit score to see how credit worthy you are. The closer your credit score is to 900, the higher the chances that the lender will approve your loan application. A high credit score reflects a high credit history and shows the lender that you are capable of repaying the loan.

    Credit Score is one of the most misunderstood topics in the financial book. Here are four secrets to help you understand your Credit Score better.

    Credit Score and Credit Report

    Your Credit Score is calculated based on information present in your credit report. Your credit report presents details about your credit accounts, credit application and debt repayment, among others.

    Checking Your Score Will Not Hurt It

    When you or a company enquires about your Credit Score, it’s called a soft enquiry and it does not hurt your credit score.

    Credit Score Math

    There are five prime factors that go towards deciding your Credit Score. They are - debt repayment, credit utilisation ratio, average credit age, type of credit account (secured / unsecured) and Credit Score enquiries made.

    Keep an Eye On Fraud

    You did nothing wrong and yet your Credit Score is low? Please go through your Credit Report thoroughly and immediately report any unauthorised activities to your bank to correct your score.

    Before you plan to get an application approved keep a track of your credit score on regular basis either by taking free CIBIL score or subscription based CIBIL score. Scores normally range from 300-850.

    List of Credit Information Companies in India:

    • TransUnion CIBIL Limited:

      (earlier known as - Credit Information Bureau (India) Limited) is the first Credit Information Company (CIC) of India that was founded in August 2000. The company collects and maintains records of an individual’s repayment habits related to loans and credit cards.

      These records are sent to TransUnion CIBIL Limited by the member banks and financial institutions on a monthly basis. The information received from these establishments is used to create Credit Information Reports (CIR) and credit scores. These reports and credit scores are provided to lending institutions such as banks in order to help them make lending decisions.

    • Experian Credit Information Company of India Private Limited:

      With headquarters in Dublin, Republic of Ireland, Experian uses its own methods of calculation to create credit reports. The credit report from Experian has information on an individual's credit and loan history that are bought as credit reports by various banks in India.

      Similar to TransUnion CIBIL Limited, Experian collects information from member banks and other establishments. The lenders are required to pay a fee to obtain credit reports from Experian.

    • Equifax Credit Information Services Private Limited (ECIS):

      One of the oldest credit information companies in the USA, Equifax is also the largest credit reporting agency in the US. Headquartered in Atlanta, Equifax provides credit reports for individuals as well as businesses.

      Equifax has tied up with various banks and institutions in India that help the company in creating credit reports and assessing credit scores.

    • CRIF High Mark:

      Considered to be one of the few credit information companies that specialise in analytics, scoring, and credit management solutions. CRIF High Mark creates credit reports based on the information collected from banks, Income Tax Department, and other banking as well as non-banking companies.

      The credit reports from CRIF High Mark are available for a fee. There are many Indian banks that have tied up with CRIF High Mark to create reports and to assess their borrower's financial credibility.

    Why Credit Reports are Used?

    • Determining creditworthiness
    • Reviewing missed/late payments
    • Checking the credit score online
    • To analyse all credit and loan accounts under one platform
    • Reporting errors on the report
    • Making effective landing decisions, etc.

    The Application Process for Obtaining your Credit Report

    Most CICs offer credit reports through online and offline mediums. The applicant has to submit the requested documents and pay the relevant charges to obtain a credit report.

    The following documents and details are required for obtaining a credit report online:

    The following documents and details are required for obtaining a credit report offline:

    • Visit the CIC's site to download and fill out the form requesting for your credit report
    • Self-attested and scanned copy of any of the Proof of Identity (PoI) such as PAN card, Driving Licence, etc.
    • Enclose a Demand Draft (DD) that is payable to the relevant CIC for the required fee
    • Mail the documents along with the DD to the address mentioned on the CIC's website

    What is the Difference between a Credit Score, Credit Rating, and a Credit Report?

    Credit Report Credit Score Credit Rating
    Your credit report has information on the current and past credit agreements that you hold. These include mortgages, credit card accounts, student loans, and inquiries on your credit history. A credit score is similar to a grade that is provided to your credit report. It is a 3-digit number that usually ranges from 300 to 900. A credit rating functions as an indicator of an organisation's ability to repay its loans.
    The credit report is a reflection of your credit management, and you have control over the listings there. The credit reporting bureau assigns you the credit score based on your credit history. In order to determine whether or not these borrowers will be able to repay loans on time, specialized credit rating agencies analyse their financial risk.
    The credit report gives an outline on how much you owe your creditors over an extended period of time, whether you have been making payments consistently, and for how long each account was open. The report also lists associated public records against you, such as court judgements, bankruptcy filings, etc. A high credit score indicates that you are a low-risk borrower, making you more likely to qualify for a loan. The credit rating agencies use an in-depth report to determine this rating, which considers a number of variables including previous debts, past lending and borrowing history, ability to pay back the debt, etc.
    In order to access your credit report, you can get in touch with credit reporting agencies or use a credit monitoring service that offers you this information. Your credit score is a part of the exhaustive credit report that you receive from the credit bureau. The highest credit rating is AAA or A1, which demonstrates safety in terms of principal and interest repayment. D is the lowest possible rating.

    Importance of Credit Reports for Companies and Businesses

    Similar to individual credit reports, the CICs prepare credit reports and assign credit ratings to businesses and all other types of firms. The credit report for businesses is closely reviewed by suppliers and government agencies while providing utility and business contracts.

    The credit reports for businesses provide information related to the establishment, owners/directors, employees, profit and loss, liability, assets, pending court cases (if any), and various other details. These type of credit reports can be expensive based on the amount and type of information it offers.

    Understanding the Credit Reports through Key Terms

    NA or NH:If you never owned a credit card or took a loan, there are chances that you will see an NA or NH on your credit score. NA or NH indicates that there are no, little, or insufficient credit activity to create a report or to generate an online credit score.

    STD: Applicable to an individual's credit report where the payments are made with the due dates.

    SMA: Applicable on a credit report when the borrower has delayed the repayments.

    DBT: This indicates a doubtful situation where the credit information has been inactive for over 12 months.

    LSS: A credit report can be remarked as LSS if a lender reported the loan/credit card account as loss or if the account remains as a defaulter for a longer period of time.

    DPD: Days past due (DPD) indicates the number of days that the account has not received a payment. Written Off/Settled Status: In a situation where the borrower could not make the repayment but came to an agreement with the lender for either a repayment plan or a settlement will indicate a written off or settled status.

    Reading a Credit Report

    A credit report is a detailed account of a person’s credit history. The credit report will include details of your credit accounts, like, credit cards, auto loans, home loans and any other form of credit availed from a registered lender.

    The credit report will also include details like payment history, credit limit and account balance, the opening date of credit, and the status of loans (close or open, paid in full, not paid in full). The report will also include new credit inquiries, collection records and public records, for cases in which an individual has filed for bankruptcy or a tax lien.

    A credit report can seem like quite an intimidating document to read, but listed below is a section-wise breakdown of how a person should read his/her credit report:

    Personal Information: This section of the credit report will contain information pertaining to the individual’s identity, such as, the person’s name, address, current and previous accounts, date of birth, etc. An individual should check the details provided under this section, if there is an incorrect address in the report or the person’s name has been misspelt, he/she should report this to the Credit Rating Agency (CRA) as this could be a sign of wrong data being reflected in the report or credit fraud.

    Account Information: This section of the credit report will carry information pertaining to the person’s present and past credit accounts. The individual should check the details of this section carefully as this is quite a detailed section. The following details should be checked:

    • Date of opening
    • Name of creditor
    • Current balance
    • Highest balance/credit limit
    • Monthly payment history
    • Account type (Instalment, revolving, open)
    • Account ownership (Individual or joint)
    • Payment status

    Public Records: This section of the Credit Report will list bankruptcies filed by the individual, tax liens availed by the individual or collection accounts. The dates provided in this section should be checked as they will directly affect how long they will appear on an individual’s credit report and affect the person’s credit score.

    Inquiries: This section carries data pertaining to any inquiries made by companies regarding an individual’s credit score. If an individual applies for multiple lines of credit, this could affect his/her score negatively. In most cases, inquiries do not affect a person’s credit score, as they are soft inquiries by lenders for promotional purposes. A soft inquiry is generated when the request for the credit report is not related to the individual’s request for credit.

    Listed below are some of the most common myths about credit that you should know:

    1. You will not receive credit if you do not already have it

      When you approach a lender for a loan, four elements of your credit report are analysed:

      • Account history
      • Identification
      • Inquiries
      • Public records, such as court records or bankruptcy filings

      If there is no established credit history for you, you just have to get someone to co-sign or authorise your loan. In case you do not have any one who can co-sign for you, you can explore the option of getting a secured credit card.

      This type of card requires you to put up cash as collateral. Once you start using the credit card, you will be able to establish a credit history.

      It is important that you make payments on time and use credit conservatively. Be patient, as it will certainly take time to build a credit history. Once your credit history is periodically evaluated, if you have a good standing, your credit score will increase.

    2. Checking your credit report will negatively impact your score

      If an individual accesses his/her own credit report, it will not have a negative impact on the score. In fact, it is a healthy practice to check your credit report at least on an annual basis.

      Reviewing a report results in a “soft inquiry” that will only be reflected in a personal credit report. When a lender reviews the credit report, a “hard enquiry” will be added.

      These hard enquiries are shown to other lenders who review the report in the future, as these may represent new debts that are not yet visible on the credit report. Too many hard enquiries can have a negative effect on your credit score.

    3. Once your credit score is bad, it is not possible to rebuild it

      A bad credit report can be rebuilt over time. The report shows all credit issued under the consumer’s name.

      It also shows all items that are closed or inactive. If you have missed payments or have made late payments, it can remain on your credit report for up to 7 years.

      In this time, you can rebuild your credit report by paying your dues on time, looking for better credit choices, and being judicious while spending. You have to remember that an old negative information in the report is less important than a recent positive one.

    4. The government owns credit reporting agencies

      Credit bureaus are not owned by the government. However, the government has laid down many laws on how these should operate.

    5. Paying in cash always helps to improve credit rating

      Using cash for all payments is certainly not better than using credit responsibly. This is because a consumer has to develop a credit history (displaying responsible credit usage) in order to establish a good credit score. If a consumer does not hold various types of credit accounts, his/her credit score will not be as good as another individual with a history of responsible credit usage.

    FAQs on Credit Score/Credit Report

    1. How do credit scores change?

      The credit score depends on the credit report changes, as and when the changes are made to the credit report, the credit score would change depending on the positive or negative impacts.

    2. Who can access my credit report?

      Your credit report can be accessed by you, lenders, and government-recognized regulating bodies.

    3. How can I improve my Credit Score?

      There are many ways by which you can improve your credit score. Some of these ways are maintaining payment of loan EMIs and credit card bills. Along with this, limited borrowing and maintaining a credit utilisation ratio of less than 30% can also help your score.

    4. Why is PAN card required for checking the credit score?

      The PAN card is required for obtaining the individual’s score accurately.

    5. Why do we need a phone number for a credit score?

      The phone number helps in identifying individuals accurately. Your credit report will already have your phone number, when you provide your phone number, it is verified against your records to ensure you are the right recipient for your credit score.

    6. Is there a limit to the request for accessing a credit score?

      There are no limits to the inquiry of credit score.

    7. What is the significance of credit score range?

      The credit score range can vary depending on the assessor, however, the value will represent the same level of creditworthiness.

    8. What are the factors that are included in the calculation of a credit score?

      There are a few factors that are considered while calculating an individual’s credit score. Primarily, the account information that includes information on credit cards and loans, the public records containing information pertaining to tax lien and bankruptcy, and the hard inquiries made by your lenders will be accountable for the calculation of your credit score.

    9. Will the credit score be affected for owning multiple credit cards?

      This will depend on your credit history. If you have multiple credit cards with a higher limit and you are under-utilizing or over-utilizing it, this can impact your credit score negatively.

    10. What kind of information is not included in the credit report?

      A credit report won’t contain any information related to your checking or savings accounts. Also, the information pertaining to criminal records, medical history, lifestyle, and other details are not included in the credit report.

    11. How long does the information remain on a credit report?

      This will depend on various factors such as the inclusion of hard inquiries, payment details, credit card, and loan applications. As soon any changes are detected, your credit report would change. The information is obtained on a monthly basis for the changes to be implemented. If you find any error on your credit report, you are recommended to get it corrected by the assessor.

    12. Is it possible to delete information from the credit report?

      Unless it is incorrect, no details can be deleted from your credit report.

    13. What do I need to do if I find errors on my credit report?

      If you notice any error or wrong entries in your credit report, you can get in touch with the credit report provided to get it rectified.

    14. Is the Credit Information Report the same as the CIBIL Score?

      No, the Credit Information Report contains details of credit history and inquiries, CIBIL, like various other credit rating companies have its own method of calculating the score based on the information on the credit report.

    15. Can the CIC (Credit Information Companies) change or delete my credit information?

      No, the CIC collects information from various financial institutions but doesn’t change any data. The CIC compiles information related to credit transactions and payment histories of an individual.

    16. What is the highest score you can get on Experian?

      Experian’s credit score ranges from 300 – 850. 850 being the highest score.

    17. Can I have more than one Credit Report?

      Yes, credit reports contain your overall banking history and are used to assess your credibility, which is your credit score.

    TransUnion CIBIL is one of the leading credit information companies in India. The company maintains one of the largest collections of consumer credit information in the world. CIBIL Score plays a key role in the lives of consumers. Banks and other lenders check the CIBIL Score of the applicants before approving their loan or credit card application. Consumers can visit the official website of CIBIL to check their CIBIL Score and Report.

    News on Credit Score

    • To advance the agenda of improving rating standards and foster trust with investors and issuers, Indian rating agencies unify to form an association

      The "Association of Indian Rating Agencies" or AIRA was founded by Acuite Ratings & Research Limited and CARE Ratings Limited. This organisation has been formally incorporated as a Section 8 not-for-profit organisation, and it is envisaged that it will work closely with government agencies and regulatory organisations to support the growth of the debt market.

      Seven credit rating companies have so far been registered with SEBI and have provided ratings for more than 57,000 organisations. Unexpectedly, the credit rating sector has been established in India for three decades, but there hasn't been a group to represent all of its interests.

      The original members of AIRA are Acuite Ratings & Research Limited and CARE Ratings Limited, however the organisation has issued an invitation to all other rating agencies to join its ranks. Two more rating agencies have already been added by current members, and this process is likely to be completed soon. The other three rating agencies have also received a warm invitation from AIRA to join the group as shareholder members.

      AIRA intends to work with all stakeholders to improve the availability and flow of information required for credit ratings while also raising awareness of the sector's best practises, according to Sankar Chakraborti, the group CEO and executive director of Acuite Ratings & Research Limited. He is confident that AIRA will serve as a link between all parties.

      23 October 2023

    • SBI heavily relying on credit-inexperienced and low-score consumers

      According to its most recent ‘campaign rates’ initiative, State Bank of India (SBI) is willing to stake a significant amount of money on clients with poor credit bureau scores and those who are new to credit (NTC) in order to expand its home loan and top-up loan portfolio. They are being drawn in by the huge discounts offered compared to the going card prices. The largest bank in India is providing discounts of 65 basis points and 45 bps over the card rate for house loan (HL) and top-up loan clients with credit scores between 150 and 200, as well as those who are new to credit or have no credit score. SBI has also ramped up efforts to hasten the growth of its HL portfolio by providing cardholders with credit scores of 750 and higher with a 55 basis-point discount on the card rate, translating to an effective interest rate of 8.60%. This is a part of its 1 September starting four-month ‘campaign rates’ plan.

      4 September 2023

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