Credit score typically ranges from 300-900 and is further categorized in various categories, such as no score, low, fair, good and excellent. The categorization of credit score ranges and credit score may differ, as per each Credit Bureau or Credit Information Company (CIC). The credit score range provides an indication of the credit risk that borrowers pose to the lenders (Banks/NBFCs).
Usually, a credit score is a 3-digit numeric that depicts your creditworthiness and past credit behaviour. Any credit score of 750+ or as close to 900 assures high chances of loans or credit card approval. Thinking of your credit score and where you fall in this range? Check and download your free credit report here and get monthly updates with no impact on your credit score.
Credit Score Ranges
Let us have a look at the credit score range that Credit Information Companies or Credit Bureaus consider while evaluating your new credit applications of loans and credit cards:
|Credit Score Range||Category|
|300-550||Very Low Credit Score|
|551-620||Low Credit Score|
|621-700||Fair Credit Score|
|701-749||Good Credit Score|
|750+||Excellent Credit Score|
Please Note: The credit score range mentioned above is only indicative and may vary from lender to lender and bureau to bureau.
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Importance of maintaining a Good Credit Score
Good or high credit score depicts the consumer’s creditworthiness and past credit behavior and marks the borrower at low-risk for lender. Thus, it helps the consumer in availing loans at ease, along with instant credit card approvals. High credit score increases the negotiating options for the borrower and enhances the chances of qualifying for best loan deals. Therefore, try to improve your credit score to further avail credit at low interest rates with additional benefits.
Credit Information Companies (CICs) in India
In India there are a total of 4 CICs or credit bureaus licensed and authorized by the RBI to calculate and generate credit scores for consumers across the nation. These credit bureaus generate credit scores for individuals and credit ranks for the businesses, companies, enterprises and organizations based on the credit information provided by the banks/NBFCs, and other financial institutions on a monthly basis. Below stated are the four leading credit bureaus operating in India:
It is worth mentioning that each credit bureau in India uses a different algorithm to calculate and generate credit score and credit rank. Your credit score ranges from 300 to 900, with no credit score or 300 being the lowest and 900 being the highest credit score. Higher the credit score; lower the risk of getting loan applications rejected by lenders.
Impact of your Credit Score in the Borrowing Process
The impact of credit score is as follows:
- Excellent Credit Score: An ‘Excellent’ credit score reflects that the borrower had consistently paid his/her loan installments and credit card bills on time and had no negative mark on their credit report. Lenders find it hard to say no to borrowers with excellent credit scores. This kind of credit score implies that you’ll get various loan benefits such as quick loan approval, low-interest rate, and favorable deals on all kinds of loans.
- Good Credit Score: Credit Score of most people fall in the ‘Good’ category. People with credit scores in this range have good chances of getting approval on loan application as it indicates the borrower is dependable and can be given loan but the risk is still there. Therefore, depending on the lender, you may or may not get as many loan benefits as you might have expected.
- Fair Credit Score: It indicates that borrowers have performed neither too good nor bad when it comes to handling their loan payments and credit card bills. They are more at a risk of getting their loan application rejected. Even if lenders grant them a loan, they will not get it at favorable terms and conditions. The loan will most likely be given at a high rate of interest, high down payment and fewer or no benefits.
- Poor Credit Score: There is no chance for people with poor credit score to get approval on their loan application. It is a high-risk category for lenders. Banks and other financial institutions are always wary of people with poor credit score as they do not trust them to pay the loan amount on time. It shows that the borrower is financially unstable, has excessive debt, or has missed repayments in the past. Even if a lender agrees to give you a loan, they will ask for a guarantor to reduce the risk.
Also Read: How to Download Your CIBIL Report