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What is considered the best CIBIL™ score in India?

CIBIL™ score range between 300-900. A CIBIL™ score of 750 and above is taken as a good credit score in India with the best CIBIL™ score would be anything nearing the maximum limit of 900.

A Higher CIBIL™ score gives you a better chance of getting your loan/credit card approved by lenders at the earliest with minimal fuss. Lenders are assured of the genuineness of the borrower based on his past credit history and potential debt repaying capability. They consider a borrower with a high credit score as very less likely to default on loans or credit card payments.

On the other hand, a CIBIL™ score in the range between 550 – 700 is considered an average score indicating the borrower is prone to a certain amount of risk in repayment of loans or credit cards due to not following proper financial prudence. A CIBIL™ score ranging between 300 – 549 signifies a poor CIBIL™ score which entails the lender rejecting your loan or credit card approval on the basis of your poor past creditworthiness and risky financial behaviour.

What is a CIBIL™ Score?

The need for a new loan or an additional credit card arises when you require money to meet any of your financial requirements. The main criteria considered by lenders while lending you the loan or approving an additional credit card is your CIBIL™ score.

CIBIL™ score is generated by CIBIL™, one of the four credit bureaus operating in India. The credit report and CIBIL™ score provided by CIBIL™ is crucial to the lending scenario in India across different debt mediums like personal loan, business loan, credit cards, loan against property etc. CIBIL™ score refers to a 3-digit numeric summary based on your past credit information, depicting your creditworthiness and debt repaying financial prudence.

How does CIBIL™ calculate the CIBIL™ score?

CIBIL™ generates the credit report and CIBIL™ score based on your credit history with respect to loan or credit card repayment. The credit information is provided by lending institutions on a regular basis to CIBIL™.

CIBIL™ then undertakes evaluation of your various credit information like past loan repayment patterns, default on loan or credit card payment, outstanding debt etc. It then allocated weightage to each of these factors to generate the final CIBIL™ score and the credit report. Generation of the CIBIL™ score and credit report is a regular process undertaken by CIBIL™ to evaluate a borrower’s creditworthiness and risk appetite.

Additional Reading: How is the CIBIL™ Score calculated?

What are the advantages of the best CIBIL™ score?

A best CIBIL™ score gives you an edge in negotiating your loan terms as below.

Higher possibility of loans getting approved

CIBIL™ score is very important for lenders while evaluating their whole lending process. It helps them in assessing a borrower’s creditworthiness based on their past and current credit behaviour and helps to evaluate potential repayment capability. The higher your CIBIL™ score, the greater are your chances of getting the loan approved quickly and easily by the lenders.  Having the best CIBIL™ score has the lender assured that you don’t have excessive debts which could otherwise increase your risk of default.

Better rate of interest

A best CIBIL™ score improves your chances for negotiating the rate of interest for the loan in your favour. As you have given the lender proof of your financial discipline and creditworthiness based on your high CIBIL™ score, you could put your point through to bargain for a lower rate of interest resulting in cost savings.

Loan/credit card sanctioned for a higher amount

Having a high CIBIL™ score gives your benefit in the form of availing a higher loan amount or credit card limit. Lenders consider you a low-risk category and are confident about your potential debt repaying capability.

Extension of loan tenure

Another benefit entailed by a high CIBIL™ score would be with respect to the extension of the original loan tenure applied for. Such a benefit would help you to consider your loan monthly repayments not only in a timely manner but also reduce your EMI costs over the years, giving you excess money to utilize it elsewhere.

Additional Reading: What is a Good Credit Score and Tips to Maintain It

How can I improve my chances of getting the best CIBIL™ Score?

Plan your financial needs prudently to get a high CIBIL™ score

Pay all your Loan EMIs/Credit Card Dues on Time

The first step to achieving a high CIBIL™ score is to repay all your debts on time. Doing so also helps you to avoid unnecessary late payment fees.

Restrict your credit utilization 

Your credit utilization limit should not be over 30% of the sanctioned credit card limit as lenders consider over-utilization of the credit limit as a high-risk appetite.

Avoid multiple Credit Cards/Loans at one time

Avoid going in for multiple loans or credit cards at one time or try to keep the gap between multiple debts. Having multiple loans/credit card gives an impression of a debt hungry appetite which is not favourable to lenders, who then consider you a risky category adversely impacting your CIBIL™ score.

Tracking CIBIL™ report regularly

Regularly tracking your credit report will help you verify any errors and their immediate rectification so as to get you a higher CIBIL™ score.

FAQs

1. Is 771 a good credit score in India?

Generally, a credit score of 750 and above is considered to be good. Thus, 771 is a good credit score. The closer your credit score is to 900, the higher is the likelihood of your loan application getting approved according to Credit information company, Transunion CIBIL™’s website. Apart from Transunion CIBIL™, there are 4 other credit bureaus in India, and they are Experian, Equifax, and CRIF High Mark. CreditMantri's credit score is powered by Equifax. You can do a free credit score check on

2. What is credit utilization ratio and what impact does it have when the credit utilization ratio breaches the 30% mark?

Credit utilization ratio is the amount of revolving credit you are currently using divided by the amount of revolving credit available. If your credit utilization ratio is above 30%, then you are considered as hungry for credit. Credit bureaus - Equifax, Transunion CIBIL™, Experian, and CRIF Highmark also deduct a person’s credit score by some points for crossing the required CUR mark. For this reason, it becomes essential to maintain the CUR within 30%.

3. What should one do when the CUR crosses 30% frequently?

If one’s CUR frequently crosses this mark, then one should request the card issuer to increase your credit limit or select another credit card. A higher credit limit will decrease the CUR and improve the credit score if the person does not increase his spends proportionately.

4. What are the 5 ways to improve your credit score?

  • Pay your EMIs and credit card bills without defaulting
  • Keep the CUR within 30%
  • Avoid multiple loan or credit card applications within the same period of time
  • Monitor your credit report at regular intervals
  • Do not cancel or alter old credit cards

5. Why should you monitor your credit report regularly?

The 4 credit bureaus - Equifax, Transunion CIBIL™, Experian, and CRIF Highmark calculate the credit score based on the information given by the credit card issuer or the loan lender. Any incorrect information in your credit report due to clerical errors or fraudulent transactions on your credit report will hurt your credit score. If you check your credit report regularly, then you can rectify these errors. You can fetch your credit reports from any one of the four credit bureaus and should do it at least once a year. Alternatively, there are many financial marketplaces where you can check your free credit report

Disclaimer

The 4 credit bureaus- CIBIL™, Equifax, Experian, and CRIF Highmark offer credit scores and credit reports in India. The points mentioned above are true for credit scores and reports from any bureau.

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