A good CIBIL score plays a crucial role when it comes to your financial health. That is why you must focus on achieving an ideal score if you want to purchase a gadget on monthly installments or even secure a personal loan, for that matter.
With a range of 300 to 900, your CIBIL score signifies your credit rating. Understanding “What is a good CIBIL score?” is not just a question, but a fact that will help you grasp all you need to know and do for a fantastic CIBIL score.
In this blog, we will dig into the importance of having a good CIBIL score, how to achieve and maintain it, the factors that affect your credit health, and more. Irrespective of whether you are looking to apply for a personal loan or a credit card, the first thing on your mind is to comprehend the key factors of having an impressive CIBIL score. This score will benefit you every step of the way when obtaining a stable financial condition.
Your credit behavior in the past can make or break your CIBIL score. However, a disciplined credit history makes you eligible to get a credit card or obtain a loan that helps you meet your financial needs. The score reflects your credit standing, and the risk associated with it should a lender or financial institution choose to grant you the credit.
What is a CIBIL Score?
A CIBIL Score, other than displaying your financial reliability, is a three-digit number. This three-digit number makes it easier for financial institutions to evaluate your credit history. When you check your CIBIL score regularly, doing so makes it easier for you to maintain an impeccable credit profile.
Ranging between 300 and 900, the CIBIL bureau calculates the CIBIL score of an individual (of course, it is based on their credit history). This 3-digit score allows them to make or prevent a purchase. The score is calculated by CIBIL (Credit Information Bureau (India) Limited), one of the most popular bureaus in India. This score allows a lender to evaluate an individual’s financial health and the ability to repay a loan or credit card dues.
What is a Good CIBIL Score?
To some extent, you have understood the significance of a credit score, but a question still lingers in your mind: “How much CIBIL score is good?”
If truth be told, a CIBIL score of 700 and 900 is considered outstanding, which takes your credit history up a notch. But it is almost impossible to reach the top of the CIBIL score, i.e., 900. Improve approval chances for approval on credit card or loan with a CIBIL score of 750 or above.
Do you need a emergency personal loan on an urgent basis? Maybe you want to acquire the fabulous home you took a tour of. An excellent 750 CIBIL score or above is what you need if you are looking to reap various benefits by availing of a personal loan facility. Even 725 might work to your advantage. For the odds to be in your favor, it all depends on the lender. A reliable financial institution assures you of various perks, including higher loan amounts, lower interest rates, and longer tenures to make loan repayments.
Furthermore, having a robust CIBIL score simplifies the loan documentation process, fetching you approval before you even know it. Maintaining a score of 700 and above improves your confidence to apply for any loan you want.
Advantages of a Good CIBIL Score
Here is a list of some of the biggest advantages of having a high CIBIL score:
- Loans With Attractive Interest Rates: Applicants with an attractive CIBIL score are eligible to secure loans with attractive interest rates. It indicates your ability to make loan repayments on time, with no chances of any defaults.
- Flexible Repayment Tenure: Having a perfect CIBIL score is beneficial, as it allows for flexible repayment tenure. In addition, you can make loan repayments successfully, with a long tenure.
- Amplified Credit Approval Chances: Do you know what amplifies your chances of seeking loan approval? A perfect 750 CIBIL score will do justice to your creditworthiness and financial well-being. This score allows you to get the finest terms and an easy and quick loan application process, with minimal documentation.
- Better Chances for Pre-approved Loans: The enhanced eligibility for pre-approved loans and credit cards is one of the significant benefits of an excellent CIBIL score. Moreover, there is no need to deal with extensive documentation when you get a pre-approved loan offer.
- Increased Credit Limit: A perfect CIBIL score is what you need to meet the eligibility requirement to receive an increased credit limit. This limit represents a lower credit utilisation ratio – a crucial factor to take your creditworthiness to the next level.
- Increased Negotiating Power: It boosts your power to negotiate when you have an ideal CIBIL score. You can consider negotiating the loan terms, which will help you meet your diverse financial needs. Moreover, the financial institution would not think twice before sanctioning you a higher loan amount.
- Smooth Access to Exclusive Credit Cards: One of the biggest advantages of a high CIBIL score is that it grants you access to exclusive credit cards from top-notch companies.
- Enhanced Limit for Credit Cards: Achieving a high CIBIL score fetches you a rise in the limit of your credit card. This shows that you have been making credit card payments responsibly and doing so before the due date. It makes you eligible to obtain other types of loans at competitive interest rates.
Factors Affecting Your CIBIL Score
Here is a list of some important factors affecting your credit score significantly:
- Repayment History: The credit repayment history is crucial and affects your CIBIL score significantly. Making timely debt payments and credit card monthly installments is proof that you have demonstrated good repayment behavior. Moreover, it allows you to boost your credit score. Delaying your repayments, debt settlement, etc., on the other hand, shows a lack of ability to manage your credit effectively and can affect your CIBIL score unfavorably.
- Faults in Credit Report: If there are errors in your CIBIL credit report, including inaccurate mention of repayment defaults, mistakes in active credit cards or loans, or even flaws in personal information can be detrimental to your CIBIL score. Ensure you check your credit report regularly. Moreover, you need to stay alert when filing a CIBIL dispute for error rectification.
- Numerous Loan Inquiries: Making a lot of inquiries for loans with several financial institutions in no time can adversely affect your CIBIL score, representing an urgent need for credit. Moreover, doing so can lead to a tremendous increase in hard inquiries by many financial institutions on your credit report. As a result, it can prove harmful for your CIBIL score.
- Credit Utilization Ratio: It is the ratio of credit that has been used to your total available credit limit. If the credit utilization ratio is higher, it may represent higher credit dependence, which could result in a higher burden for loan repayment soon. A lower credit utilization ratio, on the other hand, is the opposite.
- Credit Mix: A steady blend of credit (secured and unsecured) can have an advantageous impact on your CIBIL score. Other than signifying your ability to deal with credit across different types of loans and financial institutions effectively, a credit mix can have a positive impact on your CIBIL score.
- Credit History Length: Your credit history’s length is another important factor affecting your CIBIL score. A flawless track record of loan repayments typically signifies responsible credit behavior and a great history of financial stability. Not only does a long credit history work to your advantage, but it also affects your CIBIL score positively.
What Range is Considered Good for a CIBIL Score?
CIBIL stands for “Credit Information Bureau India Limited”. Also known as TransUnion CIBIL, the score they generate is called the CIBIL score. Ranging from 300 to 900, your CIBIL score plays an imperative role in determining your financial credibility and eligibility to apply for a loan.
The following table tells you about the range of the CIBIL score:
CIBIL Score Range | Rating |
300-499 | Poor |
500-649 | Average |
650-749 | Good |
750-900 | Excellent |
How Can You Improve a Good CIBIL Score?
Many factors impact your CIBIL score, and some of them include the repayment history, credit utilization ratio, credit mix, credit history age, and more.
Here is a list of some important tips that will help you boost your credit score:
- Maintain a Flawless Repayment Track Record
When you make payments of credit card bills and loan monthly installments on time, it surprises you with an increase in your CIBIL score. If you make a late payment or miss out on any, it can hurt your credit score considerably. Ensuring debt repayment on time for a sustained period can have a positive impact on your CIBIL score.
- Don’t Opt for Numerous Loan Inquiries Simultaneously
Refrain from making numerous loan inquiries with many financial institutions within a short period. Otherwise, it will create an impression that you are credit-dependent. Furthermore, it leads to a large number of hard inquiries on your credit report. It may harm your CIBIL score.
- Check Your Credit Report for Errors Regularly
When you regularly check your credit report for various faults/mistakes, ensure you have them reported and fixed on time, using the recommended dispute resolution procedure. This may allow you to enhance your credit score, which may have declined because of inaccurate data.
- Never Consider Settling Your Debts
Make sure you try to settle your debts in full. Loan settlement should be the last thing on your mind. Though debt settlement represents your inability to make debt repayments, it may alleviate the debt burden. Don’t forget that settling your debts adversely affects your CIBIL score, reducing your credit approval chances in the coming days.
Parting Thoughts
You must know how much CIBIL score is good before applying for a short term personal Loan or a credit card. A great CIBIL score leads to numerous financial opportunities and terms in your favor. Following some vital steps for maintaining a healthy credit profile affects your score significantly. With a good CIBIL score, you can boost your chances of loan approval at competitive interest rates and flexible repayment tenures.
Frequently Asked Questions
Within a range of 700 to 900, a CIBIL score is considered ideal. That’s because it enhances your credit health. This score allows you to apply for any loan or a credit card without hassles.
To improve your CIBIL score, you must focus on making payments of credit card bills and monthly installments on time. Don’t initiate several loan inquiries at the same time. You must also maintain a 30% credit utilization score.
You can always check your CIBIL score without any charge on the Credit Information Bureau (India) Limited’s official website. It pays to check your score at least twice a year, as it helps you identify issues (if any).
Lenders or financial institutions consider a CIBIL score of 750 and above good enough to approve a loan application or a credit card.
It is possible, but it depends on the financial institution, as they may offer a higher rate of interest or a lower amount for the loan you are applying for. A CIBIL score of at least 750 improves your chances for approval.
