"Do you know the importance of a good credit score? If not, know the interesting facts about good credit scores and how to improve credit score"
Published: 6 March 2023
Updated: 30 April 2024
A CIBIL score is a three-digit number that is counted from an individual's credit history. A person's credit history is calculated by looking at the payment history and other financial activities. If a person is willing to opt for an unsecured loan then the credit score plays a very important role in getting a loan approved. A person with a CIBIL score of more than 700 is considered good for approval of an unsecured loan online. To avail the loans and financial support it is suggested to boost your credit score on time and increase your chances.
CIBIL Score vs CIBIL Rank:
A three-digit number that presents the credit history of a person that ranges from 0-900, a person having CIBIL 750 and above shall have more chances of getting the loan approved.
On the other hand, CIBIL's rank ranges from 0-10 and shows the company's creditworthiness. A company with a CIBIL rank closer to 1 shall have more chances of getting financial sources.
Equifax, CIBIL, Experian, and CRIF are certain credit bureaus that generate the credit history of a person. However, the uncommon fact about all these institutions is that they provide different credit scores because these institutions have different eligibility criteria for generating credit scores. It is advisable to check the credit score from different credit bureaus to completely understand the creditworthiness.
Every applicant should know that there are some unavoidable facts about credit scores they should be aware of. In short, what you don’t know about credit scores can hurt you so it is good to know the most common facts about credit scores that are discussed below:
Credit reports and credit scores are different terms but are closely related to each other. A credit report is a complete list of the transactions that have a direct impact on your creditworthiness – everything from any bill payments to loan applications to availing credit cards.
Credit bureaus have a record of all that information and accordingly assign a numerical grade and that’s what exactly your credit score is. It shows how you're managing your money, which is easy to know before you go for a new house or car or apply for a credit card.
Calculating your score is like a maths equation with all sorts of variables. It is based on multiple credit scoring factors with varying impacts on the score:
Payment history creates a great impact on your credit score. Regardless of your bank balance, a due payment can have bad consequences for your credit score.
Check for inaccuracies or fraud on your credit report if you find your credit score incorrect. Even in case your score seems correct it is good to check your credit score occasionally and go through the transaction history.
You can check your credit score for free through our website and know your creditworthiness.
Having diverse credit is good, but opening so many credit cards can be a red flag. By doing so your score will take a hit, no doubt you will get offers from many retailers but know how you’re getting into it and the bad effect it will have on your credit score. Closing old credit cards is not a good idea, let them remain open as the closed ones can reduce your length of credit history, which has a negative effect on your credit score.
It is the amount of credit that an individual is utilizing in relation to the credit limit. Paying timely EMIs and spending less than the credit limit is a good indicator of an increased credit score.
Many websites are making individuals cautious about decreasing their credit score if they check it continuously. But this is not apt, checking credit scores individually from credit score checking websites shall never harm your credit score. It is called soft credit, in addition to this if you are applying for multiple loans and keep getting rejected it shall impact your credit score in the worst manner.
CIBIL scores have no record of the investments done by a person. It simply relies on the pattern you are repaying your loans, credit card bills, etc.
When you are applying for multiple credit facilities it makes you seem like a credit-hungry person and impacts your credit score. It shall also add a burden to your shoulders of handling multiple EMIs. It is always advisable to take fewer loans and credit facilities and plan wisely.
There are numerous myths about credit scores, let's debunk those myths in this article one by one:
The article gives you a brief of unknown facts that people usually do not know about credit scores. When a person opts for the credit and pays the EMI, it builds the credit score of a person. It is important to understand that a good credit score means a person has a high chance of getting a loan approved. A loan is not a burden but a planned decision with My Mudra. Check your credit score and apply for financial aid quickly. I would advise you to keep these three words in mind forever: "Pay on time" always. Credit scores matter a lot in availing of any loan whether it is a personal loan or a business loan.
Also read: Reasons for Loan Rejection Even with Good CIBIL Score
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