One of the most important factors lending institutions consider while processing your loan is your credit score. You can easily check free credit score online on several BFSI websites and the websites of the credit rating agencies. There are mainly 4 credit rating bureaus in India – Equifax, Experian, TransUnion CIBIL, CRIF Highmark.
Your credit score is a numerical representation of your creditworthiness, which means your ability to pay back the money lent to you. This is a 3-digit number that falls between the range of 300 – 900, 900 being the maximum. So, in order to get approved for a loan or a credit card, it is particularly important that you reach a credit score which is close to 900. Higher the credit, better are your chances of getting approved for higher limits. Having a low credit score indicates that you not been responsible with the money you borrowed and have failed to make timely payments in the past. Few other factors also come into play while your credit score is being calculated by the credit bureaus such as credit enquires, repayment history, length of your credit history, credit utilization ratio, among others.
What is my credit score telling me?
We all know that the closer you are to the number 900, the better your score is, and you have better chances of getting approved for your desired limit. Now, we look into the break-up of various credit score ranges to find out what your score means and where you should fall to be in a comfortable position.
No History: This means you do not have a valid credit history and in order to have one you need to build a credit history by taking new credit. You will get approved for a lower credit line in this case.
300 – 549:If your credit score falls under this range, then the score is considered as a bad credit score. This suggests that you have not been responsible with repayments and also have unpaid dues in your credit history.
550- 640: If your credit score falls under this range, then the score is considered to be average. You may or may not get approved for a smaller credit line depending on the lender. This means you need to work on your credit score in order to improve it.
Good Credit Score
650 – 749: If your credit score falls under this range, then the score you have is considered as good. This suggests that you have been diligent with your payments and are responsible with the borrowed money. You will definitely get approved for new credit and loans but might not be able to negotiate a good deal from the lender.
750 – 900: If you fall under this category, then the score you have will be considered as ‘excellent’. A score in this range gives you additional negotiating power which you can use to get better interest rates and credit cards with better rewards and benefits. You will also notice that more lenders are willing to lend you money.
Who calculates my credit score?
In India, there are 4 credit information companies who compute your credit score based on several criteria – Equifax, Experian, High Mark, and TransUnion CIBIL.
How is my credit score calculated?
This whole process starts from the time you make your first transaction on credit. Your bank send the information about your transaction to the credit information agencies. RBI has made it mandatory for the banks to send all the details to all four credit rating agencies. So, when a bank needs to pull out your credit history before offering you new credit, they can approach any one of the credit rating agencies to get the information.
Once the credit rating agencies have received the information about a particular transaction made by you on credit, they would start working on making a credit report for you which will contain relevant information about your financial habits, repayment history, utilization ratio and much more.
Can credit scores provided by two different credit rating agencies differ from each other?
Whereas, Different credit rating agencies may use different criteria to calculate your credit score and therefore the scores provided by two different agencies may have negligible differences. However, banks provide the same information to all four agencies due to which the possibility of having any major discrepancy does not exist.
CIBIL, out of all the agencies is considered to be more popular amongst consumers as it is recognized as one of the first credit rating agencies to penetrate the Indian market. So that this strengthened CIBIL’s position as one of the most relied upon credit information companies in India. However, banks give equal value to scores from all four agencies. Experian, Equifax, and High mark’s credit scores are as good as CIBIL’s and are acceptable by all banks and financial institutions.
CreditKaro has tied up with Equifax, so you can get your free credit score online, here.
How will I obtain my credit score?
Getting your free credit score online has never been so easy! All you need to do is follow some simple steps:
- Log on to CreditKaro.com and click on the “Check free credit score” button on the home page.
- Checkout your age
- Select your gender
- Choose your city you live in
- Mention your occupation (Self-employed/salaried).
- If you are salaried, you need to mention the name of your company
- Specify your monthly salary
- Mention your first and last name
- Add your contact details
- Verify with the OTP on your mobile phone
- Provide your PAN number
- You will receive your credit score
Also Read:- BENEFITS OF CHECKING YOUR CREDIT SCORE ONLINE
Hence, Your credit score tells a lot about you. Lenders not only think that you are good or bad with your money, they also get an idea about your financial practices. So that This report is like a score card of your finances and means a lot to someone who will lend you money. So, next time you are confused about where you should go to check your credit score, all you have to do is visit our website or download the app! Always remember, If you take care of your credit score, your credit score will take care of you.
Now you can also check your credit score on the creditKaro app! Click on the link below to download the app now!