What is the average credit score?

There is really no number that can be established as the average credit score in India. Many people see regular changes to their score based on their changing credit behaviour. Even if there is no average score, there are good and bad scores and the goal of every consumer should be to reach and maintain a good score.

What is a good credit score?

A score above 750 is a good score to have. A credit score in India is in the range of 300-900. These scores are issued by three credit rating agencies, or credit bureaus in India –CIBIL™, Equifax, Experian and CRIF High Mark. A high score implies that the customer has demonstrated consistently responsible credit behaviour over many years. Banks and other lenders tend to view such customers more favourably when reviewing their loan application. In some banks, anyone with a good score automatically qualifies for a loan without even having to go through the review process.

Sometimes, you may get different scores from the different credit bureaus. This is because each agency has its own methodology for calculating a score. Lenders are familiar with the different scoring models used by these bureaus and will use the score that best suits their requirements. For example, an auto lender might have slightly different set of criteria than a housing lender, and will choose the methodology that addresses those requirements.

What is a bad score?

In general, it is not advisable to let your score dip below 700. Of course, the lower your score, the lower the chance of qualifying for a loan. A low score is a warning signal to potential lenders that you have not demonstrated financial maturity in your credit behaviour. As a result, lenders might be reluctant to approve your loan. Even if they do offer you a loan, it might not be on attractive terms.

How can I achieve and maintain a good score?

The first step is to get a copy of your credit report and find out your score. If it is not a good credit score, you need to go through the report and identify the main credit issues that you need to work on. (These could include negotiating with lenders, correcting reporting errors and filing a dispute, or lowering your credit utilization rate.) Set a goal (ideally a score of 750) and systematically change your credit behaviour so that you reach your target.

If you do not have the time to do this on your own, CreditMantri can help you obtain a free report, analyse your credit profile, suggest specific actions to improve your score, and execute these actions so that you become loan-eligible in the most efficient and effective way possible.