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written by | April 11, 2022

Everything You Need to Know About Getting a Good Credit Score

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Table of Content


Good credit score is a great sign of the creditworthiness of an individual. Such an individual is always given priority when they apply for a loan in a bank. Good credit scores also help banks and financial lenders understand the eligibility of the volume of loans,  the corresponding interest rates if any, and the repaying ability of a customer. All money lenders, whether financial institutes or banks approve credit applications only after reviewing the credit score of a particular entity. Some of the well-known credit bureaus in India are Experian, Equifax, CRIF High Mark, and the TransUnion Credit Information Bureau (India) Limited which is popularly known as CIBIL. These are reputed credit bureaus though there is a slight variation in their respective calculations of credit scores. According to CIBIL, individuals with a credit score of 750 or more are considered good scores. The maximum upper limit is 900.

Did you know?

If you pay your credit card dues on time and if you maintain it consistently, your credit scores get impacted positively.

Understanding What is a Good Credit Score

A credit score is always depicted in three digits which range between 300 and 900. A credit score of 750 or anything above that is considered a good score. All financial lending institutes and banks refer to such scores to understand the eligibility of individuals whose applications they receive for credit facilities. There are several individuals who have scores much below the desired levels. These could be because the individuals have failed to honour their repayments or Equated monthly instalments (EMIs) on time. At times, people tend to default for the simple reason of forgetting the said dates on which they have to make pay their monthly instalments. All good credit scores range between 750 and 900. Individuals who have credit scores within this range become eligible for more attractive offers when it comes to taking loans. These offers differ across the various credit bureaus.

Let us understand this from the following table:

Range of Credit Score

Category

Eligibility description

Between 750 and 900

Very Good

Approvals are given in a speedy manner. Persons can avail of low rates of interest.

Between 700 and 749

Good

Individuals can avail of fairly reasonable interest rates

Between 650 and 699

Fair

Approval for credit could be given but with very limited options

Between 600 and 649

Uncertain

Approval for credit could be a lengthy process. Loans applied for will be available on high rates of interest

Below 600

Requires scrutiny at the earliest

    Approval for loans are highly uncertain

Different Ways to Make Your Credit Scores Better

Timely repayments of loans and EMIS

Individuals must always maintain a calendar of credit payments. This will help them maintain a good credit score.

Maintenance of a good credit utilisation ratio

Several individuals tend to exceed their credit spending. This impacts their credit scores negatively. A credit utilisation ratio should always be within a range of 30%. If it stretches beyond that because of the spending habits of the individuals, it reduces their credit score.

Also Read: Know All About your CIBIL Score and Report

Refrain from applying for too many credit cards in a short span of time

There are some individuals who make several applications for more than one credit card at short intervals. This not only raises concerns with the lending authorities but also brings about a speedy reduction in their credit scores. Individuals can spend some time on exploring the maximum limit available for credit based on their eligibility and make a practical application for a feasible credit facility.

Consistently reviewing credit scores

All credit bureaus refer to the credit scores of individuals before sanctioning their loan approvals. If the credit history casts doubts on the creditworthiness, their credit scores are impacted in a negative manner. Individuals must review their credit scores on a regular basis to avoid such situations.

Avoid the cancellation of earlier credit cards

There are many instances, where individuals who have been using their credit cards for a long time are approached by representatives of financial institutions with more attractive terms. Many people fall prey to this and cancel their old credit cards. By doing this, their good credit scores become null and void. The consistent usage of earlier credit cards works in such a way that it validates the fact that said person has been honouring loan payments. This also helps in maintaining healthy credit scores for a long time.

Also Read: Learn about Credit Score and Loan Basics

Advantages of a Good Credit Score

Avail low rates of interest on various loans

If you maintain a good credit score on a consistent basis, you will be able to avail yourself low-interest rates on the loans you apply for. This works to your advantage as you will be able to repay your loans in a speedy manner. This also helps to add some money into your savings.

Better chances of approvals for credit cards and monetary credit facilities

A ‘hard inquiry’ involves scrutiny of your credit scores by financial lenders or institutions before they sanction the same. Such inquiries can negatively impact your credit scores if they find any discrepancies in your credit history. If your credit scores are good, the said lenders will approve your application at the earliest.

Incremental credit limit

A credit history clear of all discrepancies coupled with a steady income proves a person’s creditworthiness. Once this is established with the finance-lending authorities, you will be able to avail of larger sums of credit with ease.

Increased negotiations

Weak credit scores imply high rates of interest. These can pose difficulties for the concerned persons who will not be able to negotiate with the lenders to reduce the rates. Good credit scores increase the negotiation power of individuals who can then request for better rates of interest.

Conclusion

The details of this article would have given you a clear insight into what is a good credit score. You can avail many benefits by maintaining a good credit score on a consistent basis. Good credit scores range between 750 and 900. The higher your credit score, the better the chances of approval of all your loan applications. A credit history that displays details of default on payments of loans drastically reduces the chances of credit approvals.

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FAQs

Q: Do Credit Scores Become Better if Individuals Manage to Repay all Their Pending Loans?

Ans:

Credit scores will improve for sure though on a slow basis due to the fact that you paid your loan payment inconsistently.

Q: Does a Poor Credit Score Create Obstacles in Obtaining Approval for Loans?

Ans:

Yes. A weak credit score or a credit history with irregularities of credit payments will impact approvals of loans. Even if you get approval for your loan application, it could have been done with very high rates of interest.

Q: What Credit Score is Good and How can one Obtain a Credit Score of 750?

Ans:

To enjoy a good credit score of 750, it is necessary to:

  • Honour all your loan payments on time
  • Ensure your credit utilisation is always at a minimum
  • Do not cancel or close your earlier credit card accounts
  • Try to increase the credit limit

Review your credit score on a consistent basis

Q: What is the Meaning of a Good Credit Score?

Ans:

A good credit score is an indication of a person’s responsible nature with regard to the repayment of loans. A score above 750 is considered a good credit score.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.