CIBIL Score Range in India

TransUnion CIBIL, a credit bureau known as Credit Information Bureau Limited, is the institutional body responsible for gathering and maintaining your credit records.

These records show the payments towards the credit products you have availed, like loans and credit cards.

The lenders and financial institutions then submit your payment records to the CIBIL. 

CIBIL uses this information to evaluate your creditworthiness by generating a CIBIL score and a detailed report every month. This CIBIL score is a 3-digit number that pertains to a particular CIBIL score range. Eventually, all financial bodies use this score and report to map out your creditworthiness.

What is a CIBIL Score?

CIBIL score is defined as a three-digit numerical representation of your repayment capabilities or creditworthiness and falls within a certain credit score range.

CIBIL Score Range

The credit score range or the CIBIL score range is a metric of the creditworthiness of the borrower of a future loan. If the CIBIL score falls within a certain range that is considered to be poor or difficult, then it will be challenging to obtain the desired amount of loan. Even if you have obtained the loan somehow, the rates of interest and the tenor will be on the higher side and not at all favorable.

The CIBIL score range varies from 300 to 900, and the closer your score is to 900, the better is your creditworthiness. It gives you better possibilities of getting approval for a loan or a credit card and at conditions that are in your favor.

A CIBIL score range of around 750 or higher generally symbolizes a good CIBIL score and provides quicker access to loans and credit cards. 

Given below is a more detailed view of all CIBIL score ranges with their significance and the probability of loan approval.

Here is a breakdown of what each part of the CIBIL credit score range means -

CIBIL Score Creditworthiness Loan Approval Probability

300 to 600

Needs Attention

Low

600 to 649

Doubtful

Difficult

650 to 699

Satisfactory

Possible

700 to 749

Good

Good

750 to 900

Very Good

Very High

300 is officially the worst possible scenario for your CIBIL score. It means you either have an extremely bad history of repaying debts or have never taken a debt at all in your life.

As a result, no lender would find confidence in providing you loans because they will consider this to be a high-risk situation for them. The probability of loans with such credit score is nearly zero, irrespective of the financial institution. The official rating is poor. 

However, if you are new to credit then you will still be able to get loans but of a relatively lower amount and higher rate of interest.

This loan approval score is just above the baseline but not safe yet. Of course, there are new-age NBFCs and lenders who might give you a loan within this CIBIL score range in India, the loan amount will be pretty less, along with a high rate of interest and a low repayment term.

This CIBIL credit score range usually implies frequent defaulters, or borrowers who never pay loans on time, or those who take loans from several places at once, etc. 

Although this range does not relate to a good cibil score range in India, you can say that the scales are fairly balanced on either side. The loan approval probability is not very impressive. Although most NBFCs and financial startups will offer you an instant loan considering it a relatively good credit score range in India, it will be highly challenging for borrowers to obtain loans from banks at favorable terms and conditions. 

This is considered to be a good credit score range and hence offers good probability of getting the desired amount of loan with a standard interest rate for EMI repayments and a flexible tenure for the same. Usually borrowers in this range have a relatively good track record of repaying loans on time. However, this is still not good enough for most banks as they look for applicants with scores above 750.

Considered to be the best CIBIL score range in India according to both Transunion CIBIL and Experian, anything between this range is going to ensure that you receive the loan of your choice at your terms and conditions easily. Since most of the odds are in your favor, you can get any amount of loan desired with a flexible tenor and a very reasonable rate of interest for EMI repayments. 

Importance of Maintaining a Credit Score and Steps to Improve it

Your credit score directly impacts your loan eligibility, the loan amount you can get from a lender, and the interest rate. A credit score works as a measuring unit for the lenders to judge the risks involved while lending the amount. Keeping a healthy CIBIL score range for loan repayments is very important. 

You can improve your credit score range by consistently paying your bills off on time and becoming a responsible borrower. Other practices you can follow to ensure this are -

If you have a line of credit, it's borrowed money. You need to repay it, and your repayment behavior will determine how much interest is applied. Make sure you use this borrowed money wisely and don't borrow more than you can afford to repay. Borrowing more than you can repay can lead you into a debt trap.

Late payments on your credit card or loan EMI could be reported to the credit bureaus, which will affect your score from falling into a CIBIL score good range. Set up reminders or due date alerts for your payments to stay organized and avoid late payments. In this way, you never forget to make them.

You should never have an outstanding balance on your credit card that exceeds 30% of your credit limit. This is especially important if you plan to apply for a mortgage. Banks make decisions based on your debt-to-income ratio when deciding whether to approve a mortgage application. Make sure you spend less than 50% of your monthly income on debt, or banks are more likely to reject your application.

You should repay the unpaid amount and close the account instead of opting for a settlement. You'll want to ensure that the account has a 'closed' status, which means it is fully repaid and all obligations to the lender have been fulfilled. 

Also, ensure that you get a formal closure certificate from the lender after closing an account—it might help you later on down the line if you need to borrow money or apply for a new loan.

Checking your credit report is a way to understand your credit health better. You'll need to do this periodically to ensure there are no errors in your credit history report. Any incorrect information could bring down your score, and it's crucial to identify and correct errors as soon as possible.

Benefits of having a Good CIBIL Score

Having a good credit score comes with plenty of benefits that you should know before applying for a loan. It helps you secure the amount best suited to your requirements. Here are some of the benefits:

With a higher or good credit score, the chances of approval increase because you have a healthy credit history and timely repayment behavior. A good CIBIL score also signifies that you are not in debt to multiple loans and lenders and no debt pile to hinder the repayment process.

A good credit score also helps you land with lowered interest rates, as they are based on the default payment probability. Hence, it determines sound creditworthiness and regular payments of previous loans. Since the chances of default are minimum, the low interest comes as its reward.

Factors Affecting on Your CIBIL Score

You need to be aware of the payment actions and behaviors affecting your CIBIL score. Hence, it is essential to know them in and out. Following are the factors:

One of the factors impacting your CIBIL score is your payment history. It's essential to pay your credit card and loan EMIs on time. Avoid late payments of bills at any given point in time— it can bring down your CIBIL score by 100 points. Financial Express recently reported the effect 30 days of delinquency has on your CIBIL score.

A high credit utilization ratio has a significant effect on your CIBIL score. The credit utilization ratio is the amount of credit you use in proportion to your combined credit limit, and your score goes down as your credit utilization goes up. Experts recommend only using up to 30% of your total credit limit.

It is vital to have a mix of secured and unsecured credit. Maintaining a healthy balance of both helps to improve your CIBIL score. It is essential to avoid having either high secured or unsecured debt and instead try and maintain a balanced credit.

A long credit history shows that you have a good record of handling credit. This makes it easier for lenders to assess you as a borrower, so they want to lend to you. Closing old cards will result in a lower credit score, but it will make your repayment behavior look better, making it easier for you to get credit.

Avoid making too many credit inquiries too close to each other. Credit inquiries can majorly affect your score, so you should be careful to space them out. Multiple inquiries within a short period will hurt your score. The issue is that debtors with numerous inquiries in a period are likely to default on payments.

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