A good CIBIL score is an important factor when it comes to availing credit or loans from financial institutions. CIBIL is one of the leading credit bureaus in India that assesses individuals’ creditworthiness based on their credit history and other factors.
Understanding what is good CIBIL score and CIBIL score ranges is crucial in determining individual creditworthiness. CIBIL score ranges from 300 to 900; a higher score indicates a healthier credit profile.
Generally, a score above 750 is considered good and increases the chances of loan approval at competitive interest rates. Lenders check CIBIL score for free to assess the risk of lending money to an individual. A good CIBIL score suggests responsible credit behaviour, such as the timely repayment of loans and credit card bills.
Importance of a Good CIBIL Score
Understanding what is good CIBIL score is essential for obtaining credit on favourable terms. Lenders consider the CIBIL score a key factor when evaluating loan and credit card applications. A high score indicates responsible financial behaviour and gives lenders confidence in your ability to repay borrowed funds. On the other hand, a low score may lead to higher interest rates, rejection of credit applications, or limited credit options.
What Is Good CIBIL Score?
A good CIBIL score typically falls within the range of 750 to 900. This indicates a strong credit profile and increases your chances of getting loans and credit cards approved at competitive interest rates. Lenders perceive individuals with score in this range as low-risk borrowers likely to repay their debts on time. To better understand what is good CIBIL score, let’s take a closer look at the different CIBIL score ranges:
- Excellent (800-900): CIBIL score in this range are considered excellent. Borrowers with CIBIL score in this category are likely to obtain credit on the most favorable terms. Lenders typically offer them lower interest rates and higher credit limits.
- Good (750-799): A score in this range is considered good and indicates a responsible borrower. It improves your chances of getting approved for credit at competitive interest rates.
- Fair (650-749): Falling within this range means your credit profile is fair. Lenders may still consider your application, but the terms and interest rates may not be as favourable as those offered to individuals with higher CIBIL scores.
- Poor (550-649): CIBIL scores in this range are considered poor. It indicates a higher risk for lenders, and you may face difficulty obtaining credit. The terms may include higher interest rates and lower credit limits if approved.
- Bad (300-549): A score in this range is considered bad. Individuals with CIBIL scores in this category may find it challenging to obtain credit, and if they do, the terms may be highly unfavourable.
Maintaining and Improving Your CIBIL Score
Maintaining and understanding what is a good CIBIL score or working towards improving a lower score is crucial. Here are some key steps you can take:
- Pay Bills and EMIs on Time: Timely repayment of your credit obligations is one of the most important factors influencing your score. Ensure you pay your bills and loan EMIs by the due dates.
- Keep Credit Utilization Low: To follow what is good CIBIL score steps avoid utilizing a large portion of your credit limit. Aim to keep your credit utilization below 30% of your available credit.
- Monitor Your Credit Report: Regularly check CIBIL score for free on a reliable platform such as Bajaj Finserv Credit Pass to ensure its accuracy. Look for errors or discrepancies and report them to the credit bureau for correction.
- Diversify Your Credit: Having a mix of different types of credit, such as credit cards, loans, and mortgages, can positively impact your score.
- Avoid Multiple Credit Applications: Applying for credit too frequently can have a negative impact on your score. Make sure you understand what is good CIBIL score and apply only when necessary and avoid unnecessary credit inquiries.
- Maintain a Long Credit History: A longer credit history demonstrates stability and reliability. If you have a limited credit history, consider keeping older credit accounts open to build a stronger credit profile.
- Pay Off Outstanding Debts: Reduce your outstanding debts as much as possible. Clearing off your debts improves your credit utilization and shows responsible financial behaviour.
A good CIBIL score is crucial for obtaining credit on favourable terms in India. Understanding what is good CIBIL score is and the different CIBIL score ranges and their implications can help you gauge your creditworthiness. Aim for a score above 750 to increase your chances of securing credit at competitive interest rates. By knowing what is good CIBIL score and maintaining a healthy credit profile, making timely payments, and following responsible financial habits, you can improve your CIBIL score over time. Regularly check your CIBIL score for free on reliable platforms such as Bajaj Finserv Credit Pass to stay informed about your credit health and take proactive steps towards achieving your financial goals.