Credit Score

A credit score can range anywhere between 300 to 900. A credit score of 300 denotes the least creditworthiness, while 900 denotes the highest creditworthiness. A score of 700 or above is considered the ideal credit score for any person in India.

Credit rating agencies use different formulas and algorithms for calculating credit score. Credit rating agencies consider several factors for calculating a credit score:

• Payment history
• Credit history
• Credit mix
• Amount owed
• New credit

Four credit bureaus in India calculate credit scores. These bureaus are CRIF, CIBIL™, Equifax and Experian. Each bureau has a different formula and algorithm to measure credit scores. Therefore, your credit score can vary from one credit agency to another

Having too many credit cards doesn’t impact your credit score. But you must refrain from applying too many credit cards at once. Lending institutions consider multiple credit inquiries as unfavourable. Multiple credit inquiries can also adversely impact your credit score.

Also, non-management and poor management of multiple repayments may lead to a lower credit score. But your credit score improves if you successfully manage multiple credit cards over time.

Credit scores usually gets updated at least once a month. But if you conduct some credit activity, lenders send the information to credit bureaus. In that case too, your score gets updated. Your credit score may change more frequently with multiple credit accounts or financial products.

You may not have a credit score because you never took credit. Even if you had previously taken credit, and there’s no recent related activity, you may still not have a credit score. Sometimes, lenders and banks don’t report your credit information to the credit bureaus. In that case, you may have no credit score for lack of information.

Consistently pay bills on time to boost your credit score. Keep old credit cards active and pay them promptly. Manage your credit limit wisely to control spending and raise your score. Opt for longer loan terms to reduce monthly payments and decrease the risk of default.

A single late payment has a mild credit impact, fixable by maintaining discipline. But delaying over 30 days could drop your score by 100 points. Past 90 days damages credit significantly, affecting it for 7 years. Beyond 120 days, it's sold, further reducing your score when reported.

A credit score of 900 shows maximum creditworthiness. It is almost impossible for someone to get a score of 900 as many factors are involved in calculating a credit score. However, a person can have a credit score very close to the 900 mark.

PAN is necessary to check credit scores as all your financial transactions are recorded against your PAN card. If you don’t have a PAN card, you haven’t accessed any credit in the past. It also means you may not have any credit score at all.

A credit score of 700 or higher is considered a good credit score. Any credit score above 750 is considered ideal for getting any unsecured loan. You can get a secured personal loan if you have a credit score in the range of 600-700.

Applying for a credit card or loan with a finance company invites a hard query regarding your credit. A hard query can drop your credit score by five points. Soft inquiries into your credit don’t impact your credit score.

It might be hard to get a credit score of 800 unless you have a credit mix of several kinds of credits. This means a person may have a car loan or mortgage and use credit cards simultaneously. If they can manage their debts well in the long term, they may get a score of 800 or more.

A credit score of 600 is considered a below-average score. It implies that you don’t have a healthy credit history. Most lenders and banks may not approve your loan or credit card applications.

The minimum credit score to get a credit card is 750. Any score below 750 doesn’t make you eligible for a credit card.

If you have a credit score of 650, it may be very difficult to get a personal loan. If you get a loan of 50k or higher, you would have to pay higher interest rates. You would also have to repay the loan within a shorter term.

Getting a credit score of 800 in 45 days is possible by diligently following a healthy credit discipline. Check your credit score and set your targets. Start paying off your debts instead of transferring them.

Always keep your credit card outstanding balances low. Make the payment for bills which are past the due date. Have a good credit mix of multiple kinds of credit to achieve an 800 credit score.

A credit score ranging from 300 to 550 is considered bad. If your credit score falls in this range, you need to improve your credit score.

Non-payment of credit card dues for a period of 5 years can invite late fees, increased rates of interest, and a reduction in your credit score. The bank puts your debt in the default category. Your credit cards are frozen. Your debt is sold to a third-party collection agency.

Credit scores expire when you no longer have a credit history or use credit cards for a considerable period of time. A default on your payments for more than 90 days can negatively impact your credit score. The impact remains for a period of 7 years.

Your age does not impact your credit score. But the length of your credit history or the age of your credit profile does impact your credit score. The longer the credit history, the more favourable will be your credit score.

There is no 0 credit score even if they have defaulted on their payments several times or have a poor credit history. The credit scores range from 300 to 900. 300 is the minimum credit score a person could have.

When a person starts using credit responsibly, their starting credit score range between 500 to 700.

Paying your rent doesn’t directly impact your credit score. But if you use a credit card to pay your rent, it will be a part of your credit history and help build your credit score.

A hard credit inquiry impacts your credit score negatively. It can cause your credit score to fall by 5 points or less. Persons with good credit scores are even less impacted by hard queries. Soft queries don’t impact your credit score at all.

A Credit repair involves rebuilding your credit health to a level where you become eligible for loans.

Yes, your role as a guarantor shows up on your credit report and if the primary applicant cannot pay off the loan, you will have to make the balance payments. Your credit score will be adversely impacted if you cannot repay the loan.

The Credit Score measures your creditworthiness and lenders check it for reasons like: 
• To check your credit history & record 
• To determine your capacity to repay the loan 
• To review your credit balance and judge the risk level of your profile 
• To identify if you meet the loan provider eligibility criteria 
• To offer you the best interest rate and loan amount

The customer’s account information is sent once every month. It generally takes 45 to 60 working days to update this information. 

If a loan is denied to a customer by one bank on the grounds of the Credit report, will it be denied by other banks too? Approval or rejection of a credit application depends on the credit policies of respective banks and financial institutions. Rejection of a credit application by one bank on the grounds of the credit report might not attract the same result from another bank.

Member banks and financial institutions send their customer data to Credit Score every month. In the case of a delinquent customer, if all the outstanding payment has been made in the current month, the same will be reflected in subsequent reporting to Credit Score. However, the Credit Score records for the previous months will continue to show the payment behaviour shown by the customer.