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Check your CIBIL score for free in seconds. Get instant access to your credit health and unlock better loan offers with RBI-licensed NBFC Hero FinCorp.
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Credit Score.
A credit score is a three-digit numerical figure credit bureaus calculate based on people's credit histories. India has four credit bureaus – CIBIL, Equifax, Experian, and CRIF Highmark – that maintain records of each Indian citizen’s credit accounts and assess how responsibly they manage their credit. Since the CIBIL score is a crucial score in India, lenders often rely on it to decide loan eligibility and interest rates. Having a strong score gives you instant access to your credit, making it easier to get approvals. If you pay your loan EMIs and credit card bills on time, have a diverse mix of credit accounts in your portfolio, have minimal outstanding credit balances, and have a long history of handling credit responsibly, you will maintain a good credit score over time.
In the following sections, let’s explore everything you need to know about credit score, how to check your credit health, its importance, benefits, factors affecting it, and other crucial details.
Steps to Check Credit Score Online
Those of you thinking, “How do I check my CIBIL score for free?" can follow these steps:
1. Log on to the credit bureau’s official website
2. Create an account or sign in using your login credentials
3. Fill out an online form with details, including your PAN number
4. Submit the form
5. Receive an email to your registered email ID and verify your identity through the link provided
6. Answer a few credit-related questions and get your credit report with a free CIBIL score via email.
Besides this, you can also use a CIBIL score calculator on a lending institution’s website to check the CIBIL score online. However, ensure it is an authentic and trustworthy website with advanced security measures to keep your financial details confidential. Those with questions like “When should I check my credit score?” can check it before applying for credit to measure their current eligibility.
CIBIL/Credit Score Range.
When you apply for a loan or credit card, financial institutions like Hero FinCorp check your credit score online to determine your creditworthiness and the risk of default in lending money to you. While the CIBIL score ranges from 300 to 900, anything above a score of 725 is considered good enough to build credibility and attract lucrative loan offers. These are the standard credit score ranges worth knowing:
Bad CIBIL score (550 and below)
Individuals below 550 have a damaged credit history with multiple defaults from several lenders on different credit accounts. It might also indicate a bankruptcy that remains on the credit report for up to seven years. If your score is below 550, you have a very low chance of getting loan approval and might need professional help to repair it.
Poor CIBIL score (between 550 and 649)
A credit score between 550 and 649 places you at a slightly lower level than an average consumer, as the average credit score of Indian consumers, is 715, according to an FY22 report. While you may still earn reasonable interest rates, they will be higher than consumers in the better credit score ranges. Performing a free CIBIL score check and comparing loan offers becomes more important if your score falls in this range.
Average CIBIL score (650 and 699)
Borrowers with a credit score between 650 and 699 falls in the average category. It indicates that you might have dings on your credit history but with no major delinquencies. Lending institutions might extend credit to you but comparatively at a slightly higher interest rate.
Good CIBIL score (between 700 and 749)
A credit score between 700 and 749 indicates a general sense of responsibility regarding credit and financial management. It means you make most of your payments on time and maintain low credit card balances within your credit account limits.
Excellent CIBIL score (between 725 and 900)
A credit score above 725 indicates consistently responsible behaviour in managing loans. It shows a long history of regular repayments with low balances on credit card bills. If your score falls in this range, you are a prime candidate to qualify for a loan at lower interest rates with favourable terms and conditions.
Why Check Your Credit Score?
Your CIBIL score is crucial when it comes to loans and credit. Checking it regularly helps you stay on top of your financial health. Here’s why it is important.
1. A credit score is calculated based on your repayment history, outstanding balances, and credit mix, so reviewing it often lets you see the effects of your actions on your score.
2. It ensures the accuracy of the information in the credit report and makes it error-free.
3. A strong credit score gives you better negotiating power while applying for a loan.
4. The score helps you gain control over your finances and boosts your confidence in managing them.
5. It also creates a good impression on prospective lenders.
Tips to Improve Your Credit Score.
Although it is not an overnight process, here are some practical ways to improve your credit score fast:
1. Clear all outstanding balances on loans and credit cards.
2. Check your credit report, identify errors in it, and get them rectified for an instant boost.
3. Minimise credit card usage to bring the credit utilisation ratio down.
4. Request an increase in your credit limit.
Best Practices for Maintaining a Good CIBIL Score.
Once the credit score reaches a decent mark, follow these tips to maintain it there:
1. Pay all loan EMIs and credit card bills on time, as your CIBIL score is a crucial factor lenders look at before approving loans.
2. Avoid using too much of your credit limit, and keep the credit utilisation ratio below 30%.
3. Check your credit report regularly to track your recent credit activity and know what to expect while applying for a new loan.
4. Avoid applying for multiple credit cards and loans within a short period.
5. Do not cancel old credit cards, as they assure lending institutions that you pay your bills on time and have a healthy credit history.
6. Maintain a balance between secured and unsecured credit lines.
What are the Benefits of a Good Credit Score?
While most loan companies want to know your CIBIL score while evaluating your credit application, here are a few benefits associated with a high credit score:
Higher Chances of Approval
A high credit score indicates a clean repayment record, responsible credit behaviour, and minimal risk of default, which typically increases your chances of getting easy and fast loan approval.
Lower Interest Rates
A high credit score convinces lenders to provide comparatively lower interest rates on various loans.
Better Access to Pre-approved Loan Offer
A decent credit score increases your chances of getting pre-approved loans, giving you quick access to loans with minimal documentation and faster approvals.
Easier Access to Premium Facilities
Before approving a loan application, lending institutions check your CIBIL score online to determine your credibility. A high score encourages lenders to give you better loan offers with more premium facilities and services.
Approval for a Bigger Loan Amount
A high credit score increases the chances of getting approved for a bigger loan sanction. That is because a higher score indicates a lower default risk owing to responsible credit behaviour.
Longer Loan Tenures
Longer loan terms usually involve a higher risk for the lenders. However, a decent credit score reduces this risk and makes you eligible for a longer tenure. It results in smaller EMIs and easier repayments to better manage the monthly expenses.
What is the Difference Between a Credit Score and a Credit Report?
CREDIT REPORT
The credit report is like a credit history summary that credit bureaus calculate based on your credit accounts, repayment history, and overall credit behaviour.
The credit report acts as a credit reference, based on which the credit bureau measures your credit score.
The credit report is a standalone document credit bureau creates based on your credit history.
You can request a copy of your credit report from the credit bureau only.
One credit bureau provides one free credit report in a year. Additional procurement of credit reports attracts charges.
CREDIT SCORE
A credit score is a 3-digit number that you get based on your credit report.
Most lending institutions check CIBIL scores to measure your credit risk as an applicant.
You get a CIBIL score solely based on the data available in the credit report.
You can check your free credit score at the credit bureau’s website or a third-party entity or NBFC.
You can check your free credit score online any number of times without restrictions.
What are Credit Bureaus?
A credit bureau is a data collection agency that gathers information about an individual's credit history and payment records from various credit accounts and makes it available to creditors. Also known as credit reporting agencies, they work in two ways:
1. Firstly, they compile the summary of your credit history based on your credit-related behaviour using your PAN number.
2. Secondly, they create credit score reports using your credit-related information and provide them to creditors to help them measure your creditworthiness. As an individual, you can also request your credit report to understand your credit situation better.
The Reserve Bank of India has authorised four credit bureaus to collect credit-related activities of Indian citizens:
1. TransUnion Credit Information Bureau (India) Limited (CIBIL): CIBIL is one of India's oldest credit information companies. The credit score from CIBIL, also known as the CIBIL score, ranges from 300 and 900.
2. Experian Credit Information Company of India Private Limited: Experian is a multi-national credit reporting agency established in India in 2010. The Experian credit score ranges from 300 to 900.
3. Equifax Credit Information Services Private Limited (ECIS): Equifax is a joint venture with Equifax Inc. USA and some leading finance companies in India. The Equifax credit score ranges from 300 to 900.
4. CRIF High Mark Credit Information Services: Founded in 2007, CRIF High Mark is a full-service credit information agency with credit scores ranging from 300 to 900.
When you apply for a loan, your financial institution will approach a credit bureau to obtain your credit report and evaluate your loan application.
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