CIBIL score also known as credit score displays your past credit record. Having a clear idea regarding a strong score range can be advantageous if you are looking to place an application for a loan in the upcoming times. This is because it has a substantial bearing on the fate of loans and other credit applications. Lenders use credit scores as an important parameter to evaluate the existing credit risk of a potential loan borrower. So, whether it is SBI or Bajaj, both the SBI CIBIL score check and Bajaj CIBIL score check are crucial aspects to understanding your credibility as a loan seeker. Read to understand what’s a credit score range and what must be done if your score is not in this range.
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What’s a CIBIL score?
CIBIL score refers to a 3-digit number called a credit score. Lenders or financial institutions evaluate your credibility through credit score. CIBIL is arguably one of the most important RBI (Reserve Bank of India) approved credit rating agencies. The bureau is run by TransUnion CIBIL, previously called Credit Information Bureau Limited and started offering bureau services in India around 2004.
What’s the CIBIL score range?
Refer to the below-mentioned table to understand what’s a strong credit score or CIBIL score range and what’s considered as poor –
|NH/NA||No history or not applicable||You have never availed of any loan or swiped a credit card. Owing to such reasons, you have no past credit record.|
|300 – 549||Low or poor||You have various missed repayments or EMI or credit card due defaults or have submitted multiple direct credit inquiries in a short time span or hold a poor credit utilisation ratio (CUR). Lenders may not approve your credit as there’s a constant high default risk.|
|550 – 649||Fair||You might either have multiple credit inquiries or late payment of credit card dues or EMIs. Many lenders may not give the approval for a loan or credit card. Note that even if a few lenders provide approval, it will be at a higher interest rate and processing charges, which would result in a higher overall loan cost.|
|650 – 749||Good||You may have an excellent past repayment record. Lenders would consider you as a borrower who is low risk and may provide the approval for a loan at an affordable rate of interest.|
|750 – 799||Very good||You come with an impressive credit record as you pay them with credit card and loan outstanding dues periodically, and in full. There are high chances of you receiving the loan approval alongside a low rate of interest.|
|800 – 900||Excellent||You maintain the finances perfectly and have an excellent past credit record, periodically repay your credits, and hold a low credit utilisation ratio. Lenders tend to offer you an affordable interest rate at favourable terms and conditions on your loans or credit card.|
What’s an excellent CIBIL score?
In general, applications for credit by loan seekers who have credit scores ranging between 750 and 900 are tough to turn down. A strong score ensures a higher chance that your loan would be approved. No matter it is a home loan, personal loan or auto loan, any credit score over 750 is considered an excellent credit score.
You can avail the loan with a low rate of interest, high principal proceeds and a higher repayment period if you hold a strong score. Also, it would result in quicker and easier documentation procedures. Every financial institution come with its risk evaluation mechanism and a good credit score range may differ from one lender to another. While private lenders may not readily extend loans to you i.e., the loan seeker with a low CIBIL score, various public sector institutions lend to you i.e., the loan seeker with an average credit score of over 650.
What’s a poor CIBIL score?
A poor CIBIL score is one which is usually below 650. A credit score of less than 650 may often disqualify your request for a loan. This is because it implies you have poor credit or have not displayed financially disciplined behaviour in loan repayments. Holding a poor credit score makes financial institutions see you as a high-risk loan seeker. Lenders may not give approval for the loan or credit application in case they think you do have to hold a strong history of meeting your credit borrowing repayments on time and in full.
Why is it crucial to hold a strong credit score?
There are various advantages to holding a strong score. Mentioned here are some crucial ways which an excellent credit score can make your overall life affordable and easier –
Lower rate of interest
If you are a borrower with a higher score, then you have a high chance of being offered a loan at a low rate of interest. That is because lenders factor in high credit score individuals as highly responsible and less risky loan seekers.
Quick access to credit
Holding a strong score can assist you get instant and easy credit access. Lenders and financial institutions have a high chance of approving your credit card and loan application if you hold a strong credit score.
Big ticket loans
If you hold a high score, financial institutions are generally willing to allow you to borrow higher loan proceeds. This is because, they see your score as good, which shows your past credit record demonstrating that you as a seeker would repay the borrowed funds back on time within the repayment time period without missing out on a single loan EMI. Having a good credit score also enhances your chance of securing a pre-approved loan deal.
Higher negotiation power
A strong score provides you with the leverage to negotiate for better terms on a loan or credit card. This can involve the low rate of interest loans, high-end credit cards, higher loan-to-value ratios on home loans, pre-approved deals and others.