Credit Score
CIBIL Score Ranges
Your credit score is like a school report card, but instead of showing your grades, it indicates how well you manage your finances. Banks check this score before deciding whether to give you a loan or a Credit Card. The CIBIL score ranges from 300 to 900—the higher the score, the better.
Understanding the CIBIL score ranges can help you target the right financial habits.
What is CIBIL score range?
Your CIBIL score ranges from 300 and 900, which indicates your creditworthiness. Banks and lenders use your credit to determine whether they can lend you money. The score is based on your financial history, including your ability to repay loans and manage credit effectively. The CIBIL score scale provides a standard way for lenders to assess your financial behaviour.
The Credit Information Bureau India Limited (CIBIL) collects this data from banks and creates a credit report. A higher score means better chances of getting loans at lower interest rates.
Paying off outstanding loans, avoiding missed payments, and keeping your Credit Card usage below the limit can help boost your score. A high position within the CIBIL score ranges offers numerous advantages.
Understanding different CIBIL score ranges
The CIBIL score scale is divided into several categories, each indicating a different level of creditworthiness:
- NA/NH (no history): This indicates you have no credit history, meaning you have never taken a loan or used a Credit Card.
- 300-599 (Poor): A CIBIL score range between 300 and 599 suggests a history of unpaid Credit Card bills or EMIs.
- 550-649 (Fair): While better than a poor credit score, most lenders remain hesitant to extend credit to individuals in this range. If approved, you may be subject to higher interest rates.
- 650-749 (Good): This range indicates positive credit behaviour, increasing your chances of loan approval. However, some lenders might still charge relatively high interest rates.
- 750-900 (Excellent): This is the ideal CIBIL score range and signifies timely repayment of all dues and loans.
Factors affecting the CIBIL score
Understanding where you fall on the CIBIL score ranges can help you prioritise actions that lead to credit improvement.
- Repayment history: Timely payments boost your score, while delays or defaults significantly lower it.
- Credit utilisation ratio: Lenders typically avoid borrowers with utilisation ratios exceeding 35%.
- Multiple credits: Having numerous active loans can lower your score. It's advisable to clear existing debts before applying for new credit.
- Loan enquiries: Multiple loan applications in a short period suggest credit hunger, which will negatively impact your score.
- Credit Card usage: High Credit Card balances indicate poor spending behaviour, thus potentially lowering your score.
- Secured vs. unsecured loans: The timely repayment of secured loans positively affects your credit score, while multiple unsecured loans may increase the perception of risk.
Benefits of a high CIBIL score
Given below are the various benefits of maintaining a high CIBIL score:
- Easier loan approval: Scores above 750 significantly increase your chances of loan approval within desirable CIBIL score ranges.
- Favourable interest rates: Higher scores qualify you for lower interest rates, saving you substantial money over the loan tenure.
- Better loan terms: Lenders offer more favourable conditions, such as longer repayment periods or lower down payments.
- Higher loan amounts: Being on the upper end of the CIBIL score scale increases your loan eligibility for larger amounts.
- Negotiating power: An excellent score gives you leverage to negotiate better terms with lenders.
Tips to improve your CIBIL score
Want to improve your CIBIL score?
- Pay bills on time: Ensure timely payment of all EMIs and Credit Card bills.
- Manage credit utilisation: Keep your Credit Card balances below 30% of your total credit limit.
- Review your credit reports: Check for errors in your report and dispute them promptly if any are found.
- Build a credit history gradually: If you're new to credit, start with a secured Credit Card and use it responsibly.
- Maintain a healthy credit mix: Having both secured and unsecured loans managed responsibly can positively impact your CIBIL rating.
- Avoid multiple loan applications: Space out your credit applications to prevent various enquiries in a short period.
How to check your CIBIL score?
Being aware of your CIBIL score levels allows you to track and improve your goals. Maintaining your position within the CIBIL credit score range is essential for financial planning. To check where you fall on the CIBIL score scale, visit the official CIBIL website or a bank’s credit score portal. Provide your details, such as name, date of birth, and PAN card number. Verify your identity through OTP authentication. Once verified, you can view your credit score and report.
If you have no credit score, you can build one by applying for credit. Axis Bank offers a diverse range of Credit Cards tailored to various needs, including shopping, travel, dining, and fuel. Benefits encompass cashback, reward points, lounge access, and exclusive discounts.
Conclusion
Your position to stay within the CIBIL score ranges will significantly impact your financial flexibility and options. By understanding the CIBIL score scale and the factors that influence it, you can take proactive steps to maintain or improve your creditworthiness.
The CIBIL score ranges from poor to excellent, and aiming higher offers tangible rewards. Regularly checking your score and addressing any issues promptly will help you maintain an excellent CIBIL score, which unlocks better financial opportunities.
Also Read: How to check your Credit Score?
FAQs
What is the minimum CIBIL score required for a loan?
The minimum CIBIL score requirement differs across lenders. Most financial institutions prefer a minimum score of 650 for loan approval. However, some lenders might offer the loan at a minimum CIBIL score of 700 and above. For the best interest rates and terms, aim for a score above 750.
How often does the CIBIL score change?
Your CIBIL score is updated every 30-45 days as lenders report new information to the bureau every month. However, if there is a communication gap between the lender and the bureau, the change might take time. As such, it is recommended to check your score to spot any missed updates and inform the bureau for correct calculations.
Can I get a loan with a low CIBIL score?
While challenging, it's not impossible. Some lenders offer loans to individuals with low scores, but these come with higher interest rates and stricter terms. Improving your score before applying is generally advisable.
Does a high CIBIL score guarantee loan approval?
A high score significantly improves your chances but doesn't guarantee approval. Lenders consider other factors, such as income, employment stability, and existing debts, before making decisions. So, even with a good CIBIL score, if your income level is low or you don't fall within the age bracket, your loan application might still get rejected.
How long does it take to improve a low CIBIL score?
Improving your position within the CIBIL score ranges typically takes 6-12 months of consistent positive credit behaviour. Serious negative marks, such as defaults, may take longer to overcome. So, always practice good financial habits to maintain a high score.
Why did my CIBIL score drop suddenly?
Sudden drops can result from missed payments, high credit utilisation, closing old credit accounts, or errors in your report. Moreover, if you settle an outstanding debt, it would also affect your credit score negatively.
Does late payment affect my CIBIL score?
Yes, significantly. Payment history is one of the CIBIL score categories that accounts for approximately 35% of your credit score calculation. Even a single late payment can lower your score, with the impact varying based on how late the payment was and your previous credit history.
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
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