Credit Score Ranges Everything You Need To Know

The credit score is the number that banks and lending institutions use to determine a person’s creditworthiness. Credit information bureaus compute the score, which ranges from 300 to 900. Four licensed credit bureaus in India calculate credit scores – Experian, CRIF High Mark Equifax, and TransUnion CIBIL TM.

The score reflects how individuals manage their finances. It also demonstrates the ability of an individual to repay a loan or other borrowed credit. Credit approval is more likely with a credit score above 750 or close to 900. Now, let’s understand the credit score ranges.

Meaning of Credit Score Ranges

Credit Score Range

Creditworthiness

Approval

601 to 649

Credit score low and needs major improvement

The chances of being approved are very low. You may be asked to provide collateral or income documentation as proof of your ability to repay the loan.

From 650 to 699

Fair credit score.

With such a score, you can get approved for credit cards and loans. There is still room for improvement. You will receive better interest rates if you achieve a score above this range.

From 700 to 749

Credit score

You can get the best credit cards and loans in the market

From 750 to 900

Credit score range

Lenders will offer you the best credit cards and loans. Lenders can also offer you premium offers and benefits. It isn’t easy to keep your credit score at this level.

How to Improve your credit score?

It takes time to build a good score. Those who work consistently to improve their score will see results. Here are some tips to help you get there.

• Paying bills on time:

Paying your EMIs on time is very important. A long history of timely payment will help you build a good credit score. When calculating your credit score, timely payments are one of the main factors. You can set up automatic payment alerts to avoid missing payments (but you must make sure not to overdraw your account). You can contact your credit card provider and explain the situation if you cannot pay a bill on time. You can ask him for more time.

• Maintain a healthy mix of credit:

You will have no credit history if you have never taken out a loan or used a credit card. To build up your credit score, it is important to borrow a mix of secured loans and unsecured ones. You will be able to get personal loans with lower interest rates and larger loan amounts.

• Regularly monitor your credit report:

Credit bureaus may sometimes have incorrectly recorded information or not updated details on your credit report. This could be affecting your credit score. You must then file a complaint with the credit bureau to resolve any discrepancies. The resolution will increase your credit score.

• Do not exceed 30% of your credit limit:

The credit utilization ratio is a major factor in determining your credit score. To get top scores, it is important to keep your credit utilization ratio within 30%. A lower CUR indicates a higher score.

• Limiting the number of hard inquiries:

Two types of inquiries are made into your credit history: a soft inquiry and a harder inquiry. Soft inquiries are made when you check your credit history, give a potential employer the authority to prevent it, or by financial institutions that you do business with. Credit card companies may also check your file in order to determine if you can receive pre-approved offers. This type of inquiry does not affect your score. Hard inquiries, on the other hand, will impact your credit score. When you apply for a credit card, the creditor will pull your credit report. The hard inquiries will appear on your credit report and will have an impact on your credit score. Too many hard inquiries can drastically lower your credit score.

• How to keep old accounts open and deal with delinquencies:

The longer your credit history or your average age is, the more attractive you are to lenders. Don’t close accounts with a good credit rating and timely repayments. Repay the full amount on delinquent or late accounts. Then, make sure you pay these accounts back on time. This will not erase your late payments, but it can help you to improve your payment record going forward.

Conclusion

A credit score is a key factor that helps you to get credit in the future. If you have a low score and are able to get a loan or a credit card, your interest rate will be higher. Also, the credit limit may be reduced. It is, therefore, important to maintain a high credit score. Once you achieve a high credit score, it is important to keep that score.

FAQs

1. Can you have a credit rating of 900?

It is possible to achieve a credit rating of 900 points in India. To achieve this score, you will need to have a lot of financial discipline and patience. A credit score of 900 can be achieved by timely payment of EMIs, bills, and other debts, a lower CUR, a longer credit history, and multiple sources of credit that are consistently repaid.

2. What is the cause of variations in credit scores across credit bureaus?

Each credit bureau uses a different methodology for scoring. Some credit bureaus will give greater weight to past credit behavior, while others will give greater weight to current credit behavior. The score is a good indicator of your credit status to lenders, even though it may change.