Your CIBIL score is a key indicator of your credit health. If you’re a responsible borrower who pays his dues on time, it will be reflected in the form of a good credit score. However, if you default on loan and credit card repayments, it will negatively impact your credit score, earning you the title of an irresponsible borrower.
So how do you check the ideal credit score range? Here’s all you need to know.
Credit score ranges
A credit score is the numeric summary of your creditworthiness, ranging from 300 to 900. The higher your credit score, the higher are your chances of obtaining a loan and vice versa. That’s why a CIBIL score check is so critical. Let’s take a look at different credit score ranges and how they impact your chances of loan approval.
- NA/NH
NA/NH stands for “not applicable” and “no history”. This means that the borrower has no existing credit history and hasn’t opted for a loan in the past or used a credit card. The borrower now needs to start building a credit history by using either of the two above forms of credit.
- 300-549
A credit score in this range is considered a bad score and indicates poor credit health. There are high chances that your loan application will be rejected as there’s a higher risk involved. A credit score in this range can only be improved after years of responsible financial behaviour. Pay all your dues on time, without missing out on a single repayment. Also, keep running a CIBIL score check every now and then to ensure a clean record.
- 550-649
Having a CIBIL score in this range is accompanied by low chances of obtaining a loan. Borrowers with consistent defaults on credit card repayments and loan repayments have their credit scores in this range. In such a case, lenders might feel apprehensive about approving the loan, and even if they agree to disburse a loan, it will generally be at a higher interest rate. Some lenders might even ask for guarantors to minimize risk.
- 650-749
A credit score in this bracket is considered a good score. Applicants with credit scores between 650 and 749 have a decent chance of getting their loan application approved. However, the interest rates on their loans are slightly higher.
- 750-900
A credit score between 750 and 900 is considered an excellent credit score. This means that the borrowers have made all their loan and credit card repayments on time and have an almost impeccable credit history. They’re also most likely to receive loan approval.
To sum up
Always try and keep your credit score above 750 to ensure maximum chances of loan approval. Not only that, a good credit score can also help you avail of benefits such as lower interest rates and larger loan amount disbursal. Performing frequent CIBIL score checks, free tools for which are available online, is a good way to manage your score.
So, maintain a good credit history, and you will be well on your way to improve your credit score.