What is a Credit Score?

Think of your credit score as a report card but for your borrowing habits. It’s a single number, typically between 300 and 900, that lenders use to decide how likely you are to repay a loan. The higher the number, the better you look to lenders, and the more likely you are to get approved for loans with favourable terms. while a lower credit score may suggest a higher risk of default. It’s important to maintain a good credit history to have access to better loan terms and interest rates.

Did You Know: Over 40% of Indians now track credit scores regularly, showcasing a rise in financial literacy and responsible borrowing habits. 1Financial Awareness Website: Livemint Category: News Article Date: 27 Dec 2023

Curious about your credit score? Steps to Get For Free with pricemint

1. Visit Pricemint: Head to Pricemint’s website on your computer or download their app on your phone. Make sure you’re connected to the internet.

2. Find the Credit Score Button: Look for a button that says “Check Credit Score” on the Pricemint website or app. It’s usually easy to find on the main page.

3. Enter Your Information: Pricemint will ask for some basic details to find your score:

  • Full Name: Enter your full legal name exactly as it appears on your ID.
  • Phone Number: Provide a working phone number so you can receive messages.
  • One-Time Password (OTP): Pricemint will send a code via text message to this number to verify it’s you.

4. Verify Your Identity: Enter the OTP you receive to confirm it’s you checking your score. This keeps your information safe.

5. See Your Latest Report: Once verified, you’ll see your Latest CRIF score on the screen! This number tells you how creditworthy you are right now.

6. Get Personalized Recommendations: Pricemint goes a step further. Based on your score, they might suggest financial products like credit cards, loans, or even gold loans that might be a good fit for you.

Remember: You can check your score as often as you want to keep track of your financial health. Checking with Pricemint won’t hurt your score because it’s a “soft inquiry,” different from loan applications which can affect your score.

What Documents Required

  • PAN Card: This is your unique 10-digit tax ID number.
  • Mobile Number: You’ll need a phone number to get a verification code.
  • Full Name: Make sure it matches your official documents exactly.
  • Date of Birth: Provide your accurate birthdate to confirm it’s you.
  • Salary Info: Some services might ask for your monthly income, but this usually isn’t required for a free report.
  • Basic Details: You might be asked about your gender and how you get paid (cash or online). This helps verify your identity.

Other Free Ways to Know Your CIBIL, Experian, and Equifax Score

  1. Credit Bureaus: Each year, you’re entitled to one free credit report from each of the three main credit bureaus in India: Equifax, Experian, and TransUnion CIBIL. These reports include your latest credit score. You can request them through Their website. 2Free CIBIL Report Website: CIBIL Category: Citation 3Free Experian Credit Report Category: Citation 4Equifax® Report Category: Citation
  2. Credit Card Companies: Many credit card companies now offer free credit rating access as a benefit for cardholders. Check your online account or contact your credit card company to see if they provide this service.
  3. Financial Apps: Several financial management apps offer free credit history monitoring as part of their services. Some popular options include OneScore, Phonepe, and Paytm.

How is Your Credit Score Calculated?

Imagine all your borrowing information – loans, credit cards, payment history – collected into a big folder. That folder is your credit report, maintained by credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark. These bureaus gather information from banks and other lenders to create this report. Your credit score is a summary of that report, boiled down to a single, easy-to-understand number.

Top Credit Bureaus In India that calculate your Score –

  1. CIBIL (Credit Information Bureau (India) Limited): This is one of the biggest in India. Most lenders rely on CIBIL’s credit score to decide on loans and interest rates. So, having a good score with CIBIL is a big deal! 5Transunion CIBIL Category: Citation
  2. Experian: This is a global company that provides detailed credit reports and scores used by many lenders in India. They’re known for their thorough analysis of your credit history.
  3. Equifax: Another big international player, Equifax offers detailed credit reports and scores. They’re often used by non-bank lenders and give a complete picture of your borrowing history.
  4. CRIF High Mark: This is a newer company, but they’re growing fast. They offer unique scores, like a special score for small businesses, showing they’re looking at new ways to assess creditworthiness.

Key Components of CIBIL Score

Let’s delve into the key factors that affect your CIBIL score:

  1. Payment History (35%): This is the big one! It shows how well you pay your bills on time. A history of on-time payments is a major plus, while late payments or missed payments can hurt your score.
  2. Credit Utilization (30%): This is how much credit you’re using compared to your credit limit. Ideally, you want to keep this below 30%. Think of it like not maxing out your credit cards – it shows you can manage credit responsibly.
  3. Length of Credit History (15%): The longer you’ve used credit responsibly, the better. This includes how old your oldest credit card or loan is, and the average age of all your accounts. A long history shows you’re a reliable borrower.
  4. Credit Mix (10%): This is the variety of credit you have, like credit cards, car loans, or mortgages. Having a mix shows you can handle different types of credit. But be careful not to open too many new accounts at once, as that can lower your score.
  5. New Credit Inquiries (10%): A single inquiry might not affect you much, but too many in a short time can lower your score slightly. Lenders might see frequent applications as a sign of potential credit problems.

Why is Your Credit Score Important?

Your credit record plays a big role in your financial life. It can affect:

  1. Interest rates on loans: A good CIBIL score can qualify you for lower interest rates on mortgages, car loans, and other borrowings. This can save you a significant amount of money over time.
  2. Approval for loans and credit cards: Lenders are more likely to approve you for loans and credit cards with a good CIBIL score.
  3. Insurance rates: Some insurance companies even consider your Credit Ratings when setting rates.

What Credit Score Range Means

The higher the number, the better you look at them. Here’s a quick guide to how much credit score is good:

Credit Score
  1. 750 and Above (Excellent): This is the golden zone! A score this high indicates you’re a very responsible borrower. You’ll likely qualify for the best loans and credit cards with the lowest interest rates.
  2. 650-749 (Very Good): This is also a great score. You’re considered a reliable borrower and should have no trouble getting approved for loans and credit cards with good interest rates.
  3. 550-649 (Good): This is a decent score. You might qualify for some loans and credit cards, but you might get offered higher interest rates than someone with a very good or excellent score.
  4. 350-549 (Fair): This is a fair score. You might still be able to get loans and credit cards, but you’ll likely face higher interest rates and may have fewer options available.
  5. 300-349 (Poor): This is a low score. It can be difficult to get approved for loans or credit cards with this score, and if you do, you’ll likely be offered very high-interest rates.
  6. Not Found: It happens when you have no credit history. no problems, we offer the CIBIL Score Builder Program For Free.

Benefits of Having a Good Score

Having a good credit history in India is like having a magic key to financial benefits:

  1. Save Money: Lower interest rates on loans mean more money in your pocket.
  2. Premium Credit Cards: Get exclusive cards with rewards, cashback, and travel perks.
  3. Easier Loan Approvals: A good credit history increases your chances of getting approved for loans.
  4. Better Apartment Rentals: Stand out to landlords and potentially get a better lease deal.
  5. Lower Insurance Rates: Save on car, home, and even life insurance premiums.
  6. Smooth Utility Connections: Setting up utilities might be easier with a good score.
  7. Job Prospects: In some fields, a good score can help you get hired.
  8. Skip Security Deposits: No need for security deposits on things like cell phones or gyms.
  9. Financial Security & Power: Enjoy peace of mind knowing you have a good score and can negotiate better loan terms.

What Impact on Credit Score Inquiries?

In India, two main types of credit inquiries can impact your credit score: soft inquiries and hard inquiries. Here’s a clearer explanation:

  1. Soft Inquiries: Imagine this as a glance at your credit report. This happens when you check your score or when a company, like a potential employer, verifies your credit score. The good news is, that soft inquiries don’t hurt your CIBIL at all.
  2. Hard Inquiries: This is a more in-depth examination. It happens when a lender checks your credit score when you apply for a loan, credit card, or anything that involves borrowing money. While usually not a big drop, hard inquiries can lower your score by a few points, especially if you have several happening close together.

Expose Common CIBIL Score Myths

  • Myth 1: Checking Your Score Lowers It: This is simply untrue! Reviewing your credit score through bureaus like CIBIL, Experian, or Equifax has no negative impact. Regularly checking your score is a smart way to stay informed about your financial health.
  • Myth 2: Closing Cards Boosts Your Score: Not quite. Closing accounts can actually hurt your score, especially if it shrinks your total credit limit. Generally, it’s better to keep credit cards open, even unused ones, to maintain a healthy credit utilization ratio.
  • Myth 3: High Income Equals High Score: Your income doesn’t directly affect your credit score. While a higher income might make managing credit easier, it’s not a factor in the calculation itself.
  • Myth 4: Bad Score = No Improvement: This is a myth! Rebuilding a poor credit score takes time and effort, but it’s achievable. Consistent good habits like on-time payments, low credit card balances, and responsible credit management can improve your score over time.

How to Improve Credit Score From Low

  1. Pay on Time, Every Time: This is the golden rule! Make sure you pay your bills, loans, and credit card balances on time to show a history of responsible credit use.
  2. Don’t Max Out Your Credit Cards: Keep your credit card balances low, ideally below 30% of your credit limit. This shows lenders you can manage credit responsibly without going overboard.
  3. Mix it Up: Having a healthy mix of credit products like secured loans (think mortgages) and unsecured loans (like credit cards) can demonstrate your ability to handle different types of credit.
  4. Credit Age: A longer credit history generally looks better. Avoid applying for too much credit too often, and try to keep older accounts active (even with a low balance) to show responsible credit management over time.
  5. Apply Smartly: Don’t apply for a ton of loans or credit cards at once. Every time a lender checks your credit score for an application (hard inquiry), it can lower your score slightly. Apply for credit only when you truly need it.
  6. Free Tools at Your Fingertips: There are free resources available to help you monitor your credit score and improve it. Platforms like Pricemint offer free credit score checks and personalized improvement plans.

How to Fix Credit Score Report Errors And Mistakes

  1. Unfamiliar Accounts: Do you see accounts you don’t recognize? This could indicate fraudulent activity. Investigate immediately.
  2. Incorrect Information: Are there errors in your personal details, payment history, or credit limits?
  3. Sudden Account Closures: Unexplained closures of your accounts can negatively impact your score. Investigate the reason.
  4. Contact Company: Reach out to the Credit bureau directly to report the errors on your report. You can do this through their official website or by contacting their customer service. Provide them with the details of the errors and any supporting documents you have.
  5.  If the mistakes are found to be genuine, CIBIL will update your credit report accordingly.

FAQs

  • What are common mistakes that can lower my credit score?

    Common mistakes that can lower your credit score include missing or making late payments, using a high percentage of your available credit, closing old credit accounts, applying for multiple new credit accounts at once, and having a limited credit history.

  • How long does it take to improve a low CIBIL?

    Improving a low credit score can take time, often several months to a year or more, depending on the factors contributing to your score. By practicing good credit habits consistently, you can gradually improve your credit score over time.

  • How often should I check my CIBIL score?

    It’s wise to review your credit score regularly, at least once a year. This helps you keep an eye on things like:
    1. Accuracy: Make sure all the information on your credit report is correct. Errors can happen, and catching them early helps protect your score.
    2. Suspicious Activity: Watch for any unauthorized accounts or inquiries you didn’t make. Early detection can help prevent fraud.

  • How long does bad credit information stay on my report?

    Negative information like late payments or defaults can stay on your credit report for up to seven years in India. In the case of bankruptcy, it might remain for ten years.

Article References

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