What is credit score?
A credit score is a three-digit number, usually from 300 to 900, which indicates your credit worthiness. A credit score helps financial institutions understand your ability to repay, or the likelihood that you will repay loans in a timely manner. A score of 300 indicates lowest probability of timely repayment, whereas a score of 900 indicates highest probability of timely repayment. A score above 700 is generally considered good.
How is credit score calculated?
Your credit score is calculated based on various important parameters of your credit history, for example:
Your Repayment Behaviour, which indicates how regularly have you repaid debts
- Your Credit Utilization Trend, or what percentage of your credit limit has been consumed
- How Aggressively you have availed or retired debts
- Your Vintage or Experience in availing or retiring debts
- Your Credit Mix, for example, whether you have availed different types of credit over your credit history
Did you check your free credit score
Every individual is eligible to obtain one free credit report per year
What is difference between Personal credit score and company credit score?
Your Credit Score can be of two types:
Personal Credit Score: this indicates an Individual’s creditworthiness, based on loans and credit cards availed and repaid by the Individual in personal capacity.
Business Credit Score: this indicates a company’s creditworthiness, based on commercial credit facilities availed and repaid by the company.
What are the benefits of good credit score?
A good credit score improves your chances of getting credit, with other benefits for example, better interest rates, quicker disbursals. Hence, it is necessary that you maintain a good credit score.
How to maintain a good credit score?
You can maintain a good credit score by following some basic steps such as
- Repaying all your instalments and credit card dues on time
- Maintaining a balanced utilization of your credit limits
- Avoiding an aggressive build up of multiple new loans in a short time
- Reviewing your Credit Report at regular intervals
- Improving your Credit Awareness
How do I find out my credit score?
CRIF Highmark is one of the four RBI licensed credit bureaus in India which provide personal and business credit scores. CRIF credit score is used as a reliable indicator for prudent decision making by credit grantors. Banks / financial institutions obtain an abridged credit report and CRIF Score by making an enquiry on your profile/business while evaluating your loan application. You can get both your Personal Credit Score and Business Credit Score by applying directly on our website.
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FAQs
1. What are credit score ranges, and what do they mean?
Credit scores range from 300 to 900, with 300 being the lowest score and 900 the highest. A higher score indicates better creditworthiness:
- 300-577: Poor - High risk of default.
- 578- 644: Fair - Somewhat risky borrower.
- 645-693: Good - Likely to be approved for credit.
- 694-900: Excellent - Low risk, most favourable terms available
A score above 645 is generally considered good. However, it's important to note that credit score ranges can vary slightly across different credit bureaus, as they may use different methodologies to calculate the scores.
To understand the specific credit score range criteria used by a particular lender, it's recommended to directly connect with them. This will help you better assess your creditworthiness from the lender's perspective and take appropriate steps to improve your credit profile if needed.
2. Can I check my credit score for free?
Yes, you are entitled to one free credit report from CRIF High Mark each year. You can access this through their website by completing a simple authentication process.
3. Can checking my credit score lower it?
Checking your own credit score is considered a "soft inquiry" and does not affect your score. Only "hard inquiries," typically made by lenders when you apply for credit, can impact your score.
4. Can anyone else check my credit score?
Your credit score is confidential and can only be accessed by you and authorised entities. These include lenders, credit card companies, and financial institutions when you apply for credit. Additionally, fintech platforms may access your credit report when you sign up for their services. It’s important to note that you must provide consent for others to view your credit score and report. General consumers or unauthorised parties cannot access your credit information.
5. Why do credit scores vary on different sites?
Different credit bureaus use varied algorithms and data to calculate your score, leading to slight differences across bureaus. Each bureau has its own scoring model, and this can cause variations in the reported scores.
6. How often does credit score update?
Credit scores are updated whenever there is a significant change in your credit activity. This can be monthly as lenders report your repayment behaviour and new credit activities to the bureaus. Credit data typically gets updated every 45 to 60 days. If your report hasn’t been updated within this period, it’s advisable to raise a dispute with CRIF High Mark to investigate and correct any delays or inaccuracies in the reporting process.
7. Can credit score increase in a month?
Yes, your credit score can increase in a month. Timely payments, reducing outstanding balances, and correcting errors in your report can lead to quick improvements. Financial institutions typically take 30-45 days to submit updated data to the credit bureau. We recommend waiting for 45 days and then generating a fresh credit report. If the issue still exists after this period, please consider raising a dispute with the bureau to address any discrepancies.
8. Can my credit score affect my ability to get a loan?
Yes, your credit score is a critical factor in determining your eligibility for loans. A higher score generally improves your chances of approval and getting favourable terms, including access to larger loan amounts, increased likelihood of loan approval, lower interest rates, and more favourable repayment terms.
9. Can I dispute errors on my credit report?
Yes, if you find inaccuracies in your credit report, you can raise a dispute ticket with CRIF High Mark. After verification, they will liaise with the financial institution to correct the errors.
10. Can closing an old account hurt my credit score?
Closing an old credit account can negatively impact your score by reducing the average age of your accounts and affecting your credit utilisation ratio. It's often better to keep old accounts open if they have no fees.