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Is your Credit Score >750?
Get answers to commonly asked questions related to the credit score and credit reports
Newspapers, bank websites, SMS and even ads at you see on YouTube are full advertisements on low-interest rates on various kinds of credit products right from home loans to auto loans, etc. Quite often you must have even thought that the rates of interest advertised are too good to be true. You must have also got tempted and looked at purchasing because the interest rates looked very attractive.
But these are the best rates that are on offer by the bank for those customers who meet all their criteria like a good credit score, specified amount of income, etc. Among all the factors that affect the interest rate on a loan, credit score plays a very important part of late. Before Credit Information Companies started assessing individuals on various parameters of their credit behavior and started assigning them credit scores, the banks had no knowledge of slip-ups in credit behavior on the part of the customer if they had been committed at other branches or banks.
Hence, a standard pricing of loans were followed in which all customers, whether creditworthy or unworthy, paid the same rate of interest. However, we have moved on from those days and today the pricing of interest rate on loans is done much differently.
Let's see how!
Lending is a risky business for anyone. Think about it! Would you be fine with lending even a small sum of money to a neighbor or a friend who is known for his habit of not returning the money? Probably not, right? Similarly, a customer is a total stranger to a bank. Before lending any sum of money, the bank would like to ascertain the probability of the amount being repaid on time.
The only way that a lender can ascertain this is through a credit score.
A Credit Score is nothing but a numerical representation of your past credit behavior shown in the range of 300-900, with higher scores denoting better standards of creditworthiness.
A credit score and the parameters that make it up are carefully analyzed before taking a decision to lend by the banks/ financial institutions. This gives them a good insight into the expected credit behavior of the applicant in future. Based on this information, the lenders set an interest rate.
If an individual demonstrates through his or her credit score that he/ she is a creditworthy customer, then the lending institution understands that the individual does not present a big risk in lending and can price the loan at a lower component of risk, i.e. interest.
Lower pricing of the loan is done provided all other factors required for approving a loan, like income commensurates with the loan applied for, stable employment, satisfactory portion of the income left for debt repayment, etc.
The awareness and utilization of the credit score has picked up of late. While theoretically, it sounds right that loans are priced according to the risk involved in lending, we understand that you might have questions on whether the same is being followed by lenders?
Yes! We bring to you examples of interest charged by different banks on various credit products based on credit scores.
For Risk Grade* 1,2,3
1yr MCLR+35bps (8.90%)
For Risk Grade* 4,5,6
One year MCLR to One year MCLR +1.00% (As per Risk Rating of the applicant/s.
* Risk Grade as assessed by the bank
Additional Reading: How bad is your credit score?
While your credit score plays a big role in determining your rate of interest, which is a deal breaker in deciding any loan, it also bears an impact on other aspects of a loan which could be:
Down Payment: Most of the loans require a down payment which is also considered as a commitment from the borrowers end towards the loan. With a low credit score, the lender may end up reducing the loan to value ratio or in other words, demand a higher figure of down payment. This may end up being a drain on the finances.
Tenure of the Loan: For loans like home loans which are big-ticket loans, tenures generally tend to be extended. For an individual with a low credit score, the lender may insist on approving the loan for a shorter tenure which then increases the EMI amount.
Amount of the Loan: The total amount of the loan approved may itself be reduced for an individual with a low credit score, which may turn out to be a cause of mental distress to the individual who is in urgent need of funds.
There are a lot of associated factors with a bad credit score; you might want to read more on the negative effects of a bad credit score here.
The only good thing about a bad credit score is that it doesn't stay bad forever. You can always take efforts toward improving your credit score; some simple things like paying your bills and EMIs on time, keeping your credit utilization low or limiting your applications to credit always help.
A CIBIL™ score is a three digit number between 300 and 900 that gives potential lenders a quick idea of your loan
Credit repair involves rebuilding your credit health to a level where you become eligible for loans.
A CIBIL™ Score is an indicator of an individual’s credit worthiness. It impacts the individual’s ability to borrow
A credit report is a history of your credit behaviour and contains detailed information on all your loan and credit
A credit rating - also known as a credit score - is a 3 digit number between 300-900 that gives potential lenders
A bad credit score is generally one that is less than 650. A credit score is a three digit number in the range of 300-900
Yes. In fact, a credit score of 850 is very good! Most lenders look for a minimum credit score of 750 to approve loans
There are several ways in which you can improve your credit score. Depending on how good or bad your score is,
Is 800 a good credit score? Yes. In fact, a credit score of 800 is very good! Only a small percentage of people reach,
Is it possible to obtain a free credit check or credit report? The answer is yes and no!
Your CIBIL™ Score plays an important role in getting loans and credit cards sanctioned, because it gives lenders
It is not possible for anyone, either lenders or borrowers, to get a CIBIL™ score or credit report for free.
It is important to know that there is no such thing as a CIBIL™ defaulter list. There used to be a defaulter list earlier,
There is really no number that can be established as the average credit score in India. Many people see regular
You can repair your credit absolutely free if you do it yourself! However, many people choose to get professional help
First, it is important to note that there is no ‘Defaulters List’ that is maintained or circulated by CIBIL™ or any of the other
Sourav and Ankit are watching the New York Marathon on TV and decide that they want to run a marathon.
In India, the best credit score to have is one that is 750 or above. The three credit rating agencies that operate in India
Is a credit score of 700 good? While it is not a very bad score, it is not good enough to automatically qualify
It is difficult to get a loan with a credit score of 650. Most banks look for a minimum score of 750 when deciding
It is not likely that you will get a loan with a credit score of 600. Most banks look for a minimum score of 750
It is difficult to get a loan with a credit score of 550. Most banks look for a minimum score of 750 when deciding
A poor CIBIL™ score can increase your financial problems and make it difficult to access credit, whether as a loan or credit.
One common worry that runs through your mind after you have made a credit card settlement is,
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