Equifax Credit Score: Meaning, Importance, Benefits & How to Check

When you apply for a loan or a credit card, the lender needs to assess your profile. They want to ensure that you can repay the amount within the specified time. The credit score is a numeric representation of your previous credit behaviour. It reflects how well you have managed your loans or credit card repayments. Equifax is one prestigious organisation that evaluates your creditworthiness. After analysis, they give you a 3-digit number called the credit score. It can be anything between 300 and 900. The higher your score is, the more creditworthy you as a borrower will be.

Benefits & How to Check

A good score helps you in getting credit facilities on favourable terms. It further opens better financial opportunities. You can also check your score online via the Equifax website.

What is an Equifax Credit Score

As mentioned, the credit score is a three-digit numerical representation of your creditworthiness. It is calculated based on credit history, repayment behaviour, and financial activity. Lenders use this score to assess loan eligibility and interest rates. Any score above 750 is considered good.

On the contrary, if your score is low, you might face difficulties in getting approval for a loan or a credit card.

Importance of Equifax Credit Score

Your financial building relies on this element as its fundamental support. The financial decision-makers who assess your credentials look at your credit score when determining your loan access rates and credit card allowance potential. A good credit score improves your loan options and economic stability:

• Quick Approval: If your score is high, you can get fast and hassle-free approvals.
• Favourable Terms: It can give you favourable terms and competitive rates.
• Higher Credit Limits: You may get higher credit limits on cards with a good score.
• Financial Stability: Maintaining a high score ensures better financial credibility and trustworthiness.

Factors That Affect Your Credit Score

Considering the importance of credit score at various levels, it is necessary that you are aware of the factors that affect it. Once you understand these factors, it will help you maintain a good score and avoid the follies that can diminish your credit score:

• Make timely payments to avoid negative markings.
• Try to maintain a healthy credit utilisation ratio.
• Maintain a significantly longer credit history as it reflects your credibility.
• Having a mix of secured and unsecured loans improves creditworthiness.
• Avoid late payments or loan defaults. They affect your credit score negatively.
• Check your score regularly, and notify the concerned organisation if you find any discrepancies.

Also Read: A Brief Overview of The Difference Between Credit Score And CIBIL Score

Benefits of a Good Score

Maintaining a healthy credit score is important for a healthy financial life. If your score is 750 or above, you can get better loan terms and higher limits on credit cards. It also opens doors for various opportunities:

• Easier Loan Approvals: Banks and lenders approve loans faster for individuals with high credit scores.
• Lower Interest Rates: A good score helps secure loans at reduced interest rates.
• Higher Credit Limits: Lenders offer increased credit limits to those with strong credit histories.
• Better Credit Card Offers: Eligibility for premium credit cards with enhanced benefits improves.
• Faster Mortgage Approvals: Home loan approvals become easier with a good credit score.

How to Check Your Equifax Credit Score

If you find it getting lower, you can take the necessary steps to improve it. On the other hand, if there is any discrepancy, you will have space to tackle it. Therefore, you should be aware of how to check your credit score.

Here are the simple steps that you can follow:

• Visit Equifax Website – Go to the official Equifax website and navigate to the credit score section.
• Register/Login – Create an account or log in with your existing credentials.
• Provide Required Details – Enter your personal information, including your PAN card and contact details.
• Verify Identity – Complete the identity verification process using OTP or other authentication methods.
• Request Credit Report – Submit a request to view your credit score and report.
• Check for Errors – Review your report for inaccuracies and report discrepancies if needed.

Also Read: Credit Scores and their Significance

Steps to Improve Your Score

In case your score is lower than the ideal range, you can take the necessary steps to improve it. Here is how you do it:

• Timely Payments: Pay your bills on time without fail.
• Credit Utilisation: The ideal way is to keep your credit usage below 30% of the available limit.
• Balanced Enquiries: Avoid multiple hard credit enquiries.
• Diversify Your Portfolio: A mix of secured and unsecured credits can improve your score.
• Keep an Eye: Regularly check your credit report.

Common Myths About Credit Score

Various misconceptions revolve around financial instruments. Similarly, a few myths are associated with credit scores that may mislead you as a borrower:

• Checking Your Credit Score Lowers It: Viewing your own score is a soft inquiry and does not impact your credit score.
• Higher Income Means a Better Score: Credit scores are based on repayment history, not income levels.
• Closing Old Accounts Improves Your Score: Closing long-standing accounts may reduce your credit history length and lower your score.
• Only Loan Defaulters Have Low Scores: Late payments and high credit utilisation can also negatively impact your score.
• Credit Scores Change Instantly: Improving a credit score takes time and consistent financial discipline.
• Paying Minimum Due Boosts Your Score: Paying only the minimum amount does not prevent interest accumulation and potential score decline.
• No Loans Mean a High Score: A lack of credit history can make it harder to achieve a high score.

Also Read: Credit Rating vs Credit Score: Know the Difference

Conclusion

To maintain your creditworthiness and lead a healthy financial life, it is important to take care of your credit score. We have mentioned several ways to improve your score if it is lower than the required range. Similarly, you can avoid the common mistakes.

On the other hand, if you require financial help to meet your requirements, you can apply for a Personal Loan of up to 5 Lakh with Hero FinCorp. We provide you with monetary help at mesmerising monthly rates as low as 1.58%.

Frequently Asked Questions

1. How is the Equifax credit score calculated?

Equifax calculates credit scores based on payment history, credit utilisation, length of credit history, credit mix, and recent credit inquiries.

2. What is a good Equifax credit score for loan approval?

A score above 750 is generally considered good for loan approvals, increasing the chances of securing favourable terms and lower interest rates.

3. Does checking my Equifax credit score affect it?

No, checking your own Equifax credit score is a soft inquiry and does not impact your credit score in any way.

4. Can I dispute errors on my Equifax credit report?

Yes, you can dispute errors by submitting a correction request on the Equifax website along with supporting documents for verification.

5. How can I maintain a good Equifax credit score?

Pay bills on time, keep credit utilisation low, avoid excessive inquiries, maintain a long credit history, and monitor your credit report regularly.

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