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Is your Credit Score >750?
Get answers to commonly asked questions related to credit bureaus
You may have come across CIBIL™ scores especially if you have been borrowing for some time. Most people tend to consider the CIBIL™ score as only a reference number and do not go into the details. Have you ever wondered, how is your CIBIL™ score calculated? Do you get inquisitive about understanding the calculations that go behind your credit score?
If you are a borrower, it makes sense to ask these questions and keep yourself updated about these details. It can help in contesting your credit score and report in the future, especially if your report shows a poor credit score. Let’s look into the details behind CIBIL™ score calculations.
A CIBIL™ score is a 3-digit number between 300 and 900 that is a snapshot of your credit-worthiness. There are four established credit rating agencies in India that issue credit scores and credit reports - CIBIL™, Equifax, Experian and High Mark. The credit scores of all three bureaus are equally valid, though the CIBIL™ score is perhaps the best-known.
Your CIBIL™ score is calculated based on all your credit-related activity within the financial system. Member banks and other financial institutions of the credit bureaus submit credit information regarding their customers on a periodic (usually monthly) basis. Following are some of the details included:
All this data is then subject to complex statistical analysis and your 3-digit credit score is calculated based on your credit records.
There are a variety of factors that go into calculating your credit score and it is important to focus on these areas when trying to improve your score. Here are the common factors that have an impact on your credit score:
Other factors that play a role in your credit score include your credit utilisation ratio (how much you spend every month as a proportion to your total credit limit), the age and type of your credit accounts (the older the account, the better for your score as lenders have a longer period from which to judge your repayment behaviour), and the number of enquiries from lenders (which reflects the applications you have made for loans and credit cards).
Checking your CIBIL™ score is easy and it can be done online. You can either visit the CIBIL™ official website and check your credit score or you can do so here on the CreditMantri website.
Here are the steps to be followed for checking CIBIL™ score on the official website:
Your CIBIL™ score is dependent on your credit history and credit behaviour. It also impacts your access to credit in the future. Your credit-related steps today can help in building a stronger and healthier credit future. Here are a few useful tips on improving your score:
Apart from learning how do I calculate my credit score, you should also know how it impacts the loan-approval process. A credit score higher than 750 is considered a good score. It indicates that you have a good credit track record and can fulfil your loan obligations on time. A low credit score indicates that you do not have a good history and there is a higher chance of loan default.
Potential lenders will look at your credit score to evaluate whether to approve your application. Most of the loans are sanctioned to individuals who have a credit score of 750 or above. Here are some of the other benefits of a good credit score and how it can impact future loans:
Each credit bureau has a different set of mathematical formulae with varying weights for all components. As a general rule, you can remember that about one-third of your credit score comprises your repayment history. Your repayment track record is the most important factor that influences your credit score. Therefore, focus on how you make your repayments to have a better CIBIL™ score.
1. How to calculate the CIBIL™ score for a home loan?
CIBIL™ score is calculated by CIBIL™ which is a credit agency in India. It is calculated basis many factors such as repayment history, credit behaviour, number of credit applications, etc. For a home loan, a CIBIL™ score of 750 and above is considered good for approval.
2. How to calculate the CIBIL™ score for a personal loan?
For a personal loan, you must have a CIBIL™ score ranging between 720-750 for easy approval. In case it is lower than this range, you may have to shell out extra interest as compensation for the risk borne by the lender.
3. How to calculate the CIBIL™ score for a car loan?
As with all other loans, a car loan requires a CIBIL™ score of 750 and above. In case of a lower score, there will be higher chances of the loan application being rejected.
4. How to calculate the CIBIL™ score for education loan?
You can get an education loan if you have a CIBIL™ score of 750 and above. This applies to the applicant’s parents as well. In the case of a minor with no credit activity, the credit scores of the guarantor (usually the parent or guardian) are considered.
5. What is a good CIBIL™ score?
A credit score ranging between 750-900 is considered a good CIBIL™ score. This can attract easy loan approvals, credit cards and loans at lower interest rates, and also loans of longer tenure and bigger quantum.
6. What is the minimum credit score required for a loan?
The minimum credit score required for a loan is 750. With a higher score, there are better chances of easy loan approval and lower interest rates.
7. How can I improve my CIBIL™ score?
You can improve your CIBIL™ score by following these tips:
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