What creates a good CIBIL Score?
The credit score is a three digit numeric summary of your credit history, which is compiled from various financial institutions, lenders and banks. The value ranges from 300-900, where 300 is the lowest score and 900 is the best score.
CIBIL, which is the most common credit bureau, puts anyone with little credit history and people with very high risk of default in the range of 300 credit score. However, there are chances your score may be less than 300 when you have no credit history. In this case you may want to build one.
Anything between 400 when your credit score is between 650-699, you are considered as moderately risky. The chances of getting a loan are better, but the terms of lending would not be very favourable to you. Only about 5.2% of all the new loans sanctioned fall under this bad, reflecting the fact that it is still not easy getting a loan in this range.
When your credit score is between 650-699, you are considered as moderately risky. The chances of getting a loan are better, but the terms of lending would not be very favourable to you. Only about 5.2% of all the new loans sanctioned fall under this bad, reflecting the fact that it is still not easy getting a loan in this range.
If you are within the 700-750 score, your credit record is satisfactory and you will probably get a loan at competitive rates, when compared to scores below. CIBIL says about 10% of all the new loans sanctioned fall within this band.
Credit scores of 750-799 is considered good and you will generally face very less difficulty in raising a loan. However, do keep in mind that credit score is not the only deciding factor is disbursement of a loan, but one of the important ones. Finally, any credit score above 800 is considered excellent and Is generally reflective of someone with good control over his or her finances and a proven track record of clearing the dues. Lenders would rarely hesitate in lending to this class of borrower.
There are other credit ratings agencies like Experian that has a similar score range of 300-900 points, with 300 being the lowest and 900 being the highest. Equifax on the other hand scores individuals on a scale of 1 to 999, with 1 being the lowest and 999 being the highest. While each credit agency has its own formula and algorithm to reach your credit score, you would get an idea about where you stand if you get the score from just one agency.
What Is Considered a Good Credit Score?
Categories of Credit Score:
- Payment history (35% of score): Do you pay your bills on time, every month?
- Amounts owed (30%): How much do you owe on your credit accounts, particularly relative to your credit limits or original loan balances?
- Length of credit history (15%): This considers various time-related factors, such as the age of your individual accounts, the age of your oldest account, and the average age of all of your accounts.
- New credit (10%): Newly opened credit accounts, as well as your recent applications for credit, are included in this category.
- Credit mix (10%): Lenders want to see that you can be responsible with different types of credit, so having several different types of accounts (credit card, mortgage, auto loan, and so on) can boost your score.
What can you do with good credit?
If your score is in the “good” range in the chart, you’ll generally be able to qualify for a mortgage loan with a competitive interest rate. The best rates are reserved for top-tier buyers, but the difference in interest rates between good and excellent credit scores may be less than you think. As of this writing, here are the mortgage rates consumers with various levels of credit scores can expect, and the difference they can make to your mortgage payment.