For many people, especially in India, who have never borrowed from a bank, credit score may be an unknown term. It is a three-digit numerical that generally ranges between 300 to 900. Anyone who has never borrowed will not have a credit score. It may be a mystery to you as to why you get a credit score and what are the benefits of a credit score. Let’s clear these doubts.
Credit score is calculated and generated by credit bureaus based on your past credit activities. Lenders use your credit score to evaluate your creditworthiness as to whether you are eligible to avail a credit or not. The credit score generated based on your past credit activities gives them a clear picture of how well you have handled your credit.
Any credit score of 750 and above is considered a good credit score. With this, you have an opportunity to get loans at lower interest rates. A good credit score gets you the power to become eligible for all type of credits from banks and NBFCs.
After availing your first credit, you will get your credit score within 3 to 6 months. If you repay all your dues on time, you could get a good credit score, ranging between 700-750. Following this, your score may change based on your credit behaviour. Your credit score might reduce if you default on your repayments, settle your loan account or the lenders write off your account. This type of individuals might find it difficult to avail any credits in the future. However, they can improve the credit score by taking responsible credit decisions.
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