A credit score is a 3-digit number that represents your creditworthiness based on your credit history and behavior. It is calculated and generated by credit bureaus, such as CIBIL, using the information provided by lenders and other sources. A credit score ranges from 300 to 900, where a higher score indicates a lower risk of defaulting on a loan or credit card. A good credit score can help you get better interest rates and terms from lenders, as well as access to more credit products .
There are four credit information companies or credit bureaus that provide credit scores in India:
- TransUnion CIBIL: This is one of the most reputable and established credit bureaus in India. It generates CIBIL score and CIBIL report for individuals and businesses based on their credit history and behavior.
- Equifax: This is a joint venture between Equifax Inc., USA and seven leading financial institutions in India. It provides credit scores and reports for individuals and commercial entities, as well as microfinance institutions.
- Experian: This is the first credit bureau to receive a license under the new Credit Information Companies (Regulation) Act (CICRA) 2005. It offers credit scores and reports for individuals and businesses, as well as fraud prevention and identity verification services.
- CRIF High Mark: This is one of the leading credit bureaus in India that specializes in providing credit scores and reports for individuals, businesses, and microfinance segments. It also offers analytics and decision support solutions.
the Score usually ranges between 300 to 900. score in range of 300 to 550 is considered poor score, while a score above 750 is considered Good.
How score affect Loan Eligibility ?
score is a reflection of how good is the repaying ability and strength of the borrower. if someone have a bad score it means they are not punctual in repaying the loans they have taken previously. the affect of the low score is :
- new loans may be denied
- new credit card may not be issued
- banks may even lower the credit limits of cards already issued
- Vehicle Loan or Home loan will be offered at higher interest rate
When you have an excellent score then opposite things happen like getting loans at lower interest rate, getting good higher limit offers on credit cards, getting pre-approved credit cards, or home/vehicle loan offers.
