CIBIL Score Range – Understanding Your Creditworthiness
CIBIL score or credit score speaks volumes about your credit history. Having a clear idea about a good CIBIL score range could be beneficial if you want to apply for a loan in the near future. Because it has a considerable bearing on the fate of the loan application. Lenders use the CIBIL score as a parameter to assess the risk class of their potential borrowers.
Read on to know what is a good CIBIL score range and what to do if your credit score is not in that range.
What is a CIBIL Score?
CIBIL score is a three-digit number, also known as ‘credit score’. Financial institutions assess the creditworthiness of borrowers seeking financial aid using the CIBIL score.
CIBIL is arguably the most popular of the four RBI-approved credit rating agencies. The credit bureau is run by TransUnion CIBIL, formerly known as Credit Information Bureau (India) Limited, and started providing credit bureau services in the country in 2004.
CIBIL Score Range
Refer to the table below to understand what is considered a good CIBIL or credit score range and what is deemed as poor:
| Credit Score | Creditworthiness | Meaning |
| NA/NH | ‘Not Applicable’ or ‘No History’ | You have never used a credit card and/or have never taken a loan. Therefore, you have no credit history |
| 300-549 | Poor | You have several missed payments or defaults on EMI or credit card bills or a huge number of credit enquiries or poor credit utilisation. Lenders might not approve your loan as there is high default risk. |
| 550-649 | Fair | You may either have several credit inquiries or irregular or late payment of EMI or credit card bills. Many lenders will not approve your loan and the ones who do will charge higher interest rate or down-payment for loans. |
| 650-749 | Good | You have a good repayment history. Lenders will consider you as a low risk borrower and might approve your loan with reasonable interest rates. |
| 750-799 | Very Good | You have an impressive credit history as you pay your credit bills regularly. There are high chances of loan approvals along with low interest rates. |
| 800-900 | Excellent | You maintain your finances very well, have an exemplary credit history, regularly pay your credits and have low credit utilisation. Banks and lending institutions will offer you the best rates and favourable terms on your credit card or loans. |
What is a Good CIBIL Score
In general, credit applications by borrowers who have CIBIL scores in the range of 750-900 are hard to decline. A good CIBIL score ensures a better chance of your loan being approved. Whether it is a personal loan, home loan or car loan, any score above 750 is considered as a good CIBIL score.
You can get a loan with low interest rate, high principal amount and a longer repayment period if you have a good CIBIL score. It will also lead to an easier and quicker documentation process.
Every financial institution has its risk assessment mechanism, and an excellent CIBIL score range might vary from lender to lender. Although private lenders might not be ready to extend loans to customers with low CIBIL scores, several public sector undertakings lend to customers who have average CIBIL scores of 650 and above.
What is a Bad CIBIL Score?
A bad CIBIL score is one which is generally lower than 650. A score below 650 might often disqualify your loan approval request. This is because it implies that you have bad credit or have not shown financially responsible behaviour.
Having a bad CIBIL score makes lenders consider you as a high risk customer. Lenders might not approve your credit or loan application if they conclude that you do not have a good history of fulfilling your financial obligations.
Why is it Important to Have a Good Credit Score?
There are many benefits of having a good credit score. Here are four ways in which good credit score can make your life more easier and affordable:
1. Lower Interest Rates
Borrowers with higher credit scores are offered loans with low interest rates. That’s because lenders consider high CIBIL score individuals as responsible and ‘less-risky’ borrowers.
2. Easy Access to Credit
Having a good credit score could help you get quick and easy access to credit. Banks and lenders are more likely to approve your loan and credit card application if you have a good CIBIL score.
3. Big Ticket Loans
If you have a high credit score, banks would be willing to let you borrow higher amounts. This is because your credit score, which is based on your credit history demonstrates that you will be able to pay back the money that you borrow within the repayment period without missing any EMIs. Most chances you would get a pre-approved loan offer if you have a good CIBIL or credit score.
4. More Negotiating Power
A good credit score gives you leverage to negotiate better terms on a credit card or loan. This could include low-interest rate loans, premium credit cards, higher LTV (loan-to-value) ratio for home financing, instant loans, and pre-approved offers, among others.
How to Improve your CIBIL Score?
Your credit score is an important factor that determines whether your loan will be approved or not. CIBIL score depends on a number of financial factors. If you know what is keeping your credit score low, you can improve it over time by taking the necessary steps.
Here are the factors that influence your CIBIL score:
- Repayment History: This is the record of how punctual you are while repaying your credit card bills and monthly EMI.
- Utilisation of Credit Limit: This deals with how much credit limit you use. The higher your credit utilisation is from 30%, the lower is your credit score.
- Multiple Credit Enquiries: Taking loans from multiple lenders at once might not be a wise move. The lenders might consider such borrowers to be desperate for money.
- Length of Credit History: Your older credit accounts display how consistently responsible your credit behaviour is. Therefore, you should refrain from closing your old account to improve your CIBIL score.
Also Read: CIBIL Score Calculator And How To Check CIBIL Score Online
Final Word
A good CIBIL score range is between 700 – 750 and above. Clearly, it is a deciding factor for lenders about the borrower’s creditworthiness. Which, in turn, determines whether a loan could be provided.
It is best to be prudent with your financial practices. Don’t commit irrational acts that might reduce your creditworthiness. Doing so will prevent you from availing a loan when you actually need it.
FAQs
Ans: CIBIL score is the first impression of the borrower for lenders. The lenders entertain only those loan applications having a good CIBIL score and turn down all others with poor CIBIL scores. CIBIL score is a record of your credit history; regardless of how financially sound you are, your application won’t be processed if your CIBIL score is poor.
Ans: Lenders consider a CIBIL score above 700 good when evaluating credit applications. Thus if your CIBIL score is above 700, you will likely be granted credit facilities.
Ans: Yes, your CIBIL score can be improved. To increase your credit score, make sure you pay all your EMI’s and credit card bills in full and on time. Keep credit utilisations to a minimum (preferably below 30%), refrain from making frequent credit inquiries and keep a balanced mix of secured and unsecured loans.
Ans: Customers with no previous credit exposure have a CIBIL score of “NA” or “NH.” It’s not bad if your CIBIL score comes out as “NA” or “NH, and it is just an indicator of no credit history, and lenders usually don’t consider this a red flag, so you can still get a loan even if your CIBIL score comes out as “NA” or “NH.”
Ans: Yes, CIBIL provides all users with one free CIBIL report per year. However, for any subsequent CIBIL inquiries that you make, you’ll need to buy a subscription plan. It’s advisable not to make multiple CIBIL inquiries as it degrades your CIBIL score.
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