Finance

​Major Things to Be Aware of Before Checking Your Credit Report

A credit score is computed by credit bureaus after factoring in different parameters like your credit history length, past repayment record, credit inquiries, etc. When you place an application for a loan or credit card from NBFCs or banks, having a higher score might entitle you to get further advantages like higher loan proceeds, lower rate of interest and your choice of loan repayment tenure. 

Credit score range & what it means?

A credit score in India ranges anywhere between 300 and 900. You must always take the necessary steps to bring your score nearer to the 900 mark. This is because the closer your score is to 900, the higher your chances of availing of loan approval. For instance, in case you are looking for a home loan, then your CIBIL score for home loan must be 750 and above. In simpler words, in case you have been shortlisted by your lender, suppose you selected HDFC bank for availing of a home loan. However, to get approval, the HDFC home loan CIBIL score must be 750 and above. If you fail to maintain a score of 750 and above, then you may not be eligible for a home loan or any other type of credit option. 

CIBIL score range

CIBIL score is a three-digit number that endows a summary of credit history from various details on a credit report, like accounts and enquiries. Your CIBIL score ranges anywhere from 300 to 900. The higher your score, the simpler and easier it is for you to avail of a loan or credit card approval. Making late repayments or multiple enquiries result in a reduction of your credit score. ​A score equaling 750 and above is looked upon as ideal and allows you to qualify for different loans and credit cards. In the case your score is below 750, you may find it tough to get a loan from a bank or NBFC.

In the scenario if the loan is approved, the rate of interest will be high; in the case, the CIBIL score is near ​750, then banks or NBFCs may then approve your application at a lower rate of interest. The 4 crucial sections of a credit report are public records, credit enquiries, credit summary and account history. The different parameters that are factored in by CIBIL to compute the score are your new credits, credit mix, length of credit history, credit repayment behaviour and credit utilization ratio. 

Experian score range

Experian score ranges anywhere from 300 to 850. A score in India equaling 800 and more is looked upon as good. A high score is anything that is over 750. The higher your score, the more the lender or creditor will be confident in considering you. Most scores range anywhere from 600 to 750. Different lenders like banks and NBFCs offer loans and credit cards depending on your score. Approval of the car loans even is based on your score. The better your score, the lower will be the offered interest rate on loans by the lenders, and the lower will be the offered processing charges on loans too. 

A credit score ranging anywhere between 300 and 579, 580 and 669, 670 and 739, 740 and 799 and 800 and 850 are looked upon as extremely poor, poor, satisfactory, fair, and good, respectively. A credit score is based on various parameters like derogatory info, current credit application, credit history length, credit history, credit utilization and repayment history. 

A few of the parameters that do not impact your score are the details not available in your report, where you reside, your employment, income, or age. Repaying all your bills timely and not making numerous credit enquiries will ensure a good credit score. 

Also Check: HDFC Home Loan CIBIL Score

Who calculates the credit score?

Your credit score is calculated by the 4 credit bureaus in India, namely CIBIL, CRIF High Mark, Experian, and Equifax. When you make the transaction or repayment of your outstanding dues or any other credit-linked activity, each and your activity is reported to the credit bureau by the creditor or lender, and the bureau, after receiving such details, computes your credit score. Note that sending the details to all the credit bureaus is one of the important mandates of the Reserve Bank of India (RBI). Basically, lenders keep credit information companies completely updated regarding your money-linked habits. If a lender needs to evaluate the score online, they may approach any of the credit bureaus for the same. It does not matter which bureau you choose as all will have more a less the same credit score for you – all 4 are authoritatively equal and on par with one another. 

Post getting the information from the bank, the credit bureaus get down on the task of accumulating more details linked with your financial habits from the other financial institution and banks. Credit bureaus later process this info to formulate what is known as a credit report. 

Why is it necessary for you to review your credit score?

It is necessary for you to keep a close watch on your credit score. For this, one of the best ways is to gauge your chances of opting for a credit line. The next reason why you must track your score is to know if it falls or if an error has been made by the credit agencies when computing your credit score. This may assist you in making timely amends. 

Why are there online lending marketplaces providing credit scores at zero cost?

Online lending marketplaces allow you to compute your credit score for free as they look to attain total command of your finances. Providing you with the credit score check facility allows them to gain your attention for you, and this boosts their chances of availing an application for a loan from you. 

If you hold a strong credit score, you may​ stay rest assured that your credit card or loan application may be processed easily without any hassle. You can also leverage a strong credit score by asking your lender for better interest rates and additional benefits. On the contrary, seeking credit with a low credit score may further lower your credit score. Hence, ensure to review your credit report online before you place an application for any financial product. Efficiently work on your credit score in case it is not within the acceptable range. Once you have improved your credit score, apply for the credit option, as this may endow you with the assurance of loan or credit card application acceptance.

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