A good credit score in India is a numerical representation of your creditworthiness, indicating your ability to manage credit responsibly. It's a crucial factor that lenders use to evaluate your eligibility for loans, credit cards, and favourable interest rates. Credit scores typically range from 300 to 900, in which 900 means you have good financial health.
Credit score check can be done by visiting credit bureaus (TransUnion CIBIL, Experian, Equifax, and CRIF High Mark). Remember that you are not required to pay any charges as these sites provide free credit score check services.
Maintaining a good credit score in India will reward you with several benefits including easy loan approval, credit card, and so on. Furthermore, it also demonstrates you as a financially responsible individual.
Here's how to build and maintain a good credit score in India:
One of the most important components for maintaining a good credit score is the timely payment of obligations, such as credit card balances, loans, and utility payments.
Aim to use only a small portion of your available credit. Ideally, keep your credit utilisation below 30% of your credit limit. High utilisation can negatively affect your score.
Consider acquiring a secured credit card or becoming an authorised user on someone else's account if you're new to credit.
The length of your credit history matters. Keeping old accounts open shows a longer credit history, which can boost your score.
Obtain a free credit report from credit bureaus annually and review it for errors. Keeping track of your credit score will allow you to balance it accordingly.
Each time you apply for credit, it results in a hard inquiry on your credit report, which can slightly lower your score. Thus, it's advisable to apply for new credit only when necessary.
It takes time and consistent financial behaviour to build a decent credit score. Develop sound financial habits that show that you are dependable and creditworthy. In the long run, a high credit score can save you money by enabling you to take advantage of better lending conditions and less expensive interest rates.
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A good credit score in India is generally considered to be around 750 or higher on the CIBIL scale, which ranges from 300 to 900. A score in this range indicates a strong credit history and increases your chances of getting approved for loans and credit at favourable terms.
You can check your credit score without paying any charges by visiting websites of credit bureaus such as TransUnion CIBIL, Experian, Equifax, and CRIF High Mark.
Checking your own credit score, known as a "soft inquiry," does not impact your credit score. It's considered a personal inquiry for informational purposes and has no negative effect.
Your credit score is influenced by several variables, such as payment history, credit usage, length of credit history, new credit applications, and any negative marks like late payments, defaults, or bankruptcies. These elements are combined to assess your creditworthiness and affect your credit score.