Credit Score : A complete guide to your Creditworthiness

Has it ever crossed your mind why lenders would potentially risk giving you a loan? Or why you can simply ask a bank to give you a Credit Card?

Lenders don’t just loan you money without some prior knowledge of your money spending habits. Banks and credit card companies need an evaluation of a borrower’s repayment of debts in a responsible fashion, most commonly referred to as their Credit history. It is your Credit History information that guides creditors to calculate your Credit Score.

What is a Credit Score?

Your Credit History helps potential creditors to decide whether to extend credit or not. Based on an analysis of your Credit history, repayment records, credit inquiries among others, you are given a 3 digit numerical score which directly impacts your ability to borrow money or access products like loans and credit cards. This score also referred to as you creditworthiness is termed as Credit Score. A Credit Score falls in the range of 300-900, 900 being the highest. Credit Scores are calculated by the credit bureaus in the country. The Credit Bureaus give a credit score based on the past track record on the loans taken in name of the company. There are four such bureaus in India :

1. TransUnion CIBIL
2. Equifax
3. Experian
4. CIRF Highmark

What does your Credit Score signify?

This numerical expression signifies some very important aspects of credit.

1. A mark of Qualification : Your Credit Score is a credible marker in ensuring your qualification for a loan, the interest rate applied to your loans and the limit of your credit.
2. Suitability to bring most revenue : Your Credit Score can help determine if you’re a suitable candidate to bring in a higher revenue.
3. Trustworthiness : Credit Scores help lenders and creditors place their trust in you repaying them timely as per your credit-debit patterns. It is important that lenders can rely on you and put their faith in you.
4. Ability to be insured : Credit Score is not only limited to loaning banks, but expands to insurance companies and mobile phone companies as well.

What is the Credit Score Range?

As mentioned previously, Credit Score falls in the range of 300 to 900. Here’s a detailed breakdown of each and every possible range :

1. NA/NH : In order to calculate your credit score, you need to have a credit history. If you have no credit history, your credit report will mention that your credit score is NA/NH.
2. 300 -550 : A credit score in this range is considered as a poor credit score. It suggests that you have defaulted your payments and have unpaid dues.
3. 550-650 : A credit score in this range is considered as average. You will still have to take measures to improve your credit score.
4. 650-750 : A credit score is this range is considered as good and lenders will consider granting you credit in the form of loan or credit card. However, you might still not be in the position to negotiate for a good deal.
5. 750-900 : With a credit score in this range, you will be less likely to be termed as a defaulter and lenders will be willing to offer you with a great deal for a loan as well as credit cards. A credit score in this range also gives you the additional power to negotiate for a better deal in terms of credit card rewards and interest rates.

What is a Good Credit Score?

A Credit Score close to 900, usually 880 and above is most suitable to set you in the good books of creditors.

A higher credit score offers you several benefits such as :

1. Entitlement to receive preferential pricing.
2. To get discounts on the interest rate.
3. Gives you the additional power to negotiate for better rates of interest on loans.

On the contrary, having a low credit score suggests you have not been an irresponsible borrower and have been slacking off repaying the borrowed amount.

But remember: your credit score doesn’t guarantee that you’ll be approved for credit or offered the lowest interest rates. This is because a lender’s decision is not made solely on score. So, if you’re looking for a card or loan and are worried you might be rejected, it’s a good place to start your search.

How can you calculate your Credit Score?

There are numerous avenues on the Internet that can help one calculate their creditworthiness. Here’s a list of many such sites that promise to provide you a detailed Credit Report along with your Credit Score in just 2 minutes!

BankBazaar :

You can visit BankBazaar.com and click on the ‘Check your free Experian credit score’ button. You will arrive on a page where it will ask you to navigate further by filling in various details such as :

1. Your gender
2. Your age
3. The city you currently live in
4. Your occupation (salaried/ self-employed). If you are a salaried individual, specify the name of your company
5. Your fixed net monthly salary
6. Your personal details like first name and last name
7. Your contact details such as mobile number and email. (The mobile number is used to verify if you are the right owner of your credit information )
8. You will have to verify your mobile number with a One Time Password (OTP)
9. Your PAN number
10. You will now get your free Experian credit score!

Paisabazaar :

With an easy to understand analysis of your Credit Report, Paisabazaar simply asks for the following personal details :

1. Your gender
2. Your name
3. Your date of birth
4. Your PAN number
5. Your PIN Code and Location
6. Your Email id
7. Your phone number

Simply click on ‘Get Free Credit Report’ to get an analysis of your creditworthiness.

CreditMantri :

CreditMantri has a different way to check your Credit Score. It asks for:

• A mobile verification : You are requested to type in your mobile number in order for them to send you a One Time Password (OTP).
• Identity Verification : After typing in the OTP, you’re asked :

1. Your Email Id
2. Your Date of Birth
3. Your PAN Number
4. Your marital status
5. Your PIN Code

By clicking on ‘Get Free Credit Score’ you can not only view your Credit Score but your entire Credit Profile.

IndiaLends : IndiaLends offers 100% free services for all it’s customers. Here’s all they want to know before giving you your Credit Score :

1. Your personal details like first name and last name
2. Your date of birth (as per your PAN Card)
3. Your gender
4. The city you currently live in
5. Your type of employment (salaried/ self-employed).
6. Your monthly salary
7. Your PAN number
8. Your contact details such as mobile number and email. (The mobile number is used to verify if you are the right owner of your credit information )

Click on ‘Get your Credit Score’.

In summation, your Creditworthiness is of utmost importance and reflects your eligibility for a loan and even insurance. Therefore, it is imperative that you remain in the good books of lenders and creditors and keep your Credit Score in check.