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A Credit Score is a three-digit number representing a borrower’s credit behavior, that is, a history of how well you manage your credit products and will likely clear your debts. This includes the history of personal, education, home, business, or auto loan as well as credit card. Every lender, whether a bank, NBFC institution, or credit card company, refers to this score to verify the risk of lending money or extending credit to an individual.
Accredited agencies in India compile credit reports, which lenders then use to calculate credit score of an individual. The primary credit bureau in the country is Experian, which collects and maintains individuals' information from various sources like banks, financial institutions, and other lenders. Thus, credit score is also often called Experian score. One can quickly check their Experian report online by submitting basic financial details like mobile and PAN card numbers.
Experian score ranges between 300 and 850. A higher score means a stronger credit profile and creditworthiness. Lenders perceive individuals with higher credit scores to have a lower default risk.
Factors like payment history, credit length, credit utilization, credit mix, and recent credit inquiries are considered when calculating a credit or Experian score. These criteria are assigned specific weights, and their collective assessment determines an individual's creditworthiness.
You must maintain a positive payment record and responsible credit management for a good credit score.
Credit Information Companies (CICs) provide Experian score reports to financial institutions. Thus, you must maintain a good credit score to acquire a bank loan or credit. You must regularly check your credit score, as a higher rating helps in:
Negotiating a lower interest rate on loans and credits
Getting your loan application approved and processed instantly
Applying for a new credit card without any hassle,
Obtaining credit cards with attractive features, rewards, and benefits
Waiving off pre-payment charges and processing fees in some cases
Gaining greater financial flexibility and purchasing power
Securing desirable rental accommodations since it proves your financial responsibility and reliability
Waiving off or reducing security deposits in some instances
Positively impacting your employability in industries where employers review credit scores while hiring
Maintaining a good Experian will build a solid financial profile and demonstrate responsible management, opening doors to better financial opportunities in the future.
Most lenders consider a 750 or above from Experian or any credit bureau a good credit score. Maintaining anything between 700 and 850 Experian score will simplify loan or credit card application approval. The credit scores from two agencies may vary — you can have an Experian score of 750 or above but below 700 in another agency's report. So, keep a tab on credit scores from multiple bureaus, and preferably check it once every month. Similarly, different lenders have their own benchmark of a 'good' credit score.
That said, the following ranges generally indicate creditworthiness:
These Individuals will likely have easier access to loans and credit besides a high chance of access to lower interest rates and other terms.
This score also signifies a solid credit profile, encouraging lenders to consider these individuals reliable borrowers.
Individuals have access to credit but face slightly higher interest rates or stricter lending conditions than those with higher scores.
Consumers with scores in this range might be considered subprime borrowers, qualified exclusively for loans with interest rates higher than the best available.
These borrowers are perceived as having higher credit risk and may face challenges in getting credit or loans.
Various factors affect your credit score negatively. Some of these common mistakes may seem minor, but when they add up, they have a more significant impact. These are:
Even if your credit score slips for any reason, you needn't worry, as there are ways to improve it. If you ensure to do the following, your credit score will be healthy, and lenders will perceive you as a reliable borrower:
Credit scores and credit reports are distinct but interconnected. Credit reports provide the data to determine your creditworthiness and produce the score. Thus, these are the starting points for computing the credit score that lenders can refer to.
Credit Score or Experian Score | Credit Report or IBIL Report |
---|---|
A numerical three-digit representation of creditworthiness (e.g., 300-900 in India) |
Contains comprehensive information about credit accounts, payment history, credit inquiries, public records, etc. |
Used to evaluate credit risk | Used to assess creditworthiness and make lending decisions |
Generated by specific scoring models | Compiled and maintained by credit bureaus |
Fluctuate based on recent credit activity | Reflects long-term credit behavior and history |
Frequently updated | Updated periodically by credit bureaus |
Experian score is an essential factor that lenders consider while evaluating loan and credit card applications. Having a healthy credit or Experian score has many benefits.
Institutions will approve your credit more readily if you have a good Experian score.
A strong credit score makes lenders perceive you as someone with low credit risks
You will enjoy more favorable loan terms and lower interest rates
It enhances your eligibility for credits and provides access to better credit opportunities
Improves overall borrowing capacity
A low Experian score can result in loan rejection or limited credit card options
Regularly checking your CIBIL score will give you a detailed analysis of your credit behavior, and it does not affect your credit report or score. On IIFL’s website, you can see what powers your CIBIL score, and our expert tips will help you improve it, too. Moreover, you can get exciting personalised loan offers based on your credit score.
While there is no fixed minimum score applicable universally, an Experian score of 670 or above is generally considered a good score and increases the likelihood of loan approval. Multiple financial websites offer an Experian check where you can easily get your free score.
By checking the Experian score, lenders can make informed lending decisions, manage risks, and ensure responsible lending practices. It allows them to evaluate the creditworthiness of borrowers and offer loans with appropriate terms and conditions.
Experian does not have the authority to delete or change credit information on its own. They can make changes to your credit report based on the investigation, but they rely on information provided by lenders and creditors. If the information is accurate and valid as per the lender’s records, it may not be altered. However, if there are genuine errors, the credit bureau will correct them based on the investigation and the lender’s response.
If you find errors on your credit report, you can contact Experian to report them. Experian has its own dispute resolution procedure, which may take some time as it involves coordination between the credit bureau, lenders, and creditors. You can expedite the resolution process by being proactive, providing accurate supporting documentation, and following up with the credit bureau.
Your PAN card records your major financial transactions. If you don’t have a PAN card, there is a high probability that you haven’t availed any credit. In such a case, any credit bureau cannot generate your credit score.
No, there is no specific limit on requesting access to your credit score in India. As an individual, you have the right to check your credit score as often as you need or prefer.
No. Your Experian score is private information you or a select group of authorised parties can access with your permission.
Your present lenders periodically report the status of your loans and credit cards to Experian, and over time, your report reflects this information. As a result, if you close a loan or credit card account this month, that information can still appear on your credit report.
Usually, becoming a guarantor doesn't affect your credit score. However, if the borrower is unable to make their payments, you will be held accountable and this will reflect negatively on your credit report and score.
You can download your Experian report by visiting the official website of Experian. Navigate to consumer services and click on the Experian Credit Report. You will have to sign up before generating the report if you haven’t signed up already. Enter your number, verify it with an OTP, then add your basic details such as name, address, PAN details and email address. Sign up by clicking the ‘Get Free Credit Report’ button and your Credit Report will be generated, you can download the credit report by clicking on the Download Report link.
Experian keeps the defaulter's record in its database for 6 years for the banks and NBFCs to access. Such crucial information determines a borrower's creditworthiness.
India has four credit bureaus: Experian, CIBIL, CRIF High Mark, and Equifax. These bureaus compile credit scores and reports based on an individual's credit history, payment behaviour, and borrowing patterns.
Credit Score is a three-digit number summarizing your credit history derived from your Credit Report. A credit report contains data about an individual and their history of payments, for example, Credit cards and Loans.
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