Credit Score

A credit score is a three-digit number in the range of 300 to 900, which determines the creditworthiness of an individual. It is a quantified assessment of the creditworthiness based on the financial records of the individual. It signifies the credit standing based on the repayment record of credit cards, loans etc. taken from banks and non-banking institutions. A credit score helps in gauging the repayment capacity of an individual. It plays a vital role in a lender's decision to offer credit.

Individuals can check their credit score on MyLoanCare in a matter of minutes. The steps for the same are as follows:

• Click on 'Free credit score'.
• Enter the relevant information which includes personal and employment details along with PAN number.
• You will receive an OTP on your registered mobile number.
• Provide the OTP, and you will get your FREE Credit Report.
• Credit report check will show:
  • Credit score
  • Credit analysis from MyLoanCare.in
  • Detailed Credit Report including information on your past loans and cards
  • Loan offers based on your profile and credit history

Credit Score represents the repayment capacity of an individual. It lies from 300 to 900, higher the credit score, better the chances of getting loans. Further, a higher credit score helps an individual to negotiate the terms and condition of the loans. The range of the bank credit score is as follow:

• Under 550 If the credit score is under this category, then it shows that the individual has defaulted in making multiple payments. Individuals under this category have very low or no chances of obtaining new credit.
• 550 - 649 If the credit score hovers under this category, then it will be called an average or fair credit score. Individuals will still be required to improve their credit score.
• 650-749 The credit score under this category is known as a good credit score, and an individual will be able to obtain credit. However, he will not be able to negotiate the terms and conditions of the loans.
• 750 - 900 A credit score in the range of 750 and 900 indicates a borrower is financially responsible when it comes to credit. Most of his payments, including loans, credit cards, utilities, and rental fees, are made on time. Banks will be willing to provide loans to customers under this category at cheaper rates, and the customer will also have the leverage to negotiate the terms and conditions of the loan.

Credit bureau like TransUnion CIBIL, Experian, CRIF High Mark and Equifax consolidate the past credit history and repayment behaviour of the individuals and provide a comprehensive credit bureau score to lenders.

There are multiple factors which impact the credit score. Some of the prominent ones are:

• Repayment history: Repayment history is one of the most important components of the credit score. Credit bureau keeps track of all the payments made towards bills and loans. If an individual is paying the bills on time, then it suggests the individual is a responsible borrower. Timely payment of dues impacts the credit score positively. A single default in EMI payments leads to a drop of around 100 points.
• Credit utilization: Credit utilization is ascertained by dividing the total credit by the individual divided by the absolute limits of the credit cards. The Below 30% credit utilization is considered better for most customers, and the lower, the better for your score.
• Credit history age: Credit length includes the age of the oldest credit, age of the recent credit and the average age of all the credits. Usually, the longer the credit history, the better it is.
• Credit mix: A mix of different types of credit, such as credit cards, store accounts, instalment, mortgages, car, or home loans impacts the credit score. Different types of credit options show that the individual has experience of many types of credit. Further, Total accounts individuals have is also considered.
• Credit inquiries: Banks and financial institutes review a customer's credit report when he/she applies for a new line of credit. A record of this, known as an inquiry stays on the credit reports for up to two years. Soft inquiries, like those that come from checking one’s own scores and some loan or credit card pre-qualification, don't hurt customer’s scores. Whereas, Hard inquiries, which translates when a bank or creditor checks the credit before making a lending decision, can hurt the scores even if an individual doesn’t get approved for the credit card or loan. But often a single hard inquiry will have a little impact and the scores could recover, or even rise, within a few months.

The four main Credit Information Companies in India are:

• Credit Information Bureau (India) Limited
• Equifax Credit Information Services Private Limited
• Experian Credit Information Company of India Private Limited
• CRIF High Mark Credit Information Services Private Limited

✅Why Should I check my Credit Score?

There are multiple reasons to check the credit score:

• Assesses your financial standing
• Helps in keeping the credit report error-free
• Assists in responding to changes in the credit score
• Provides useful insights about the credit score
• Assists in preparing the plan for a high credit score

✅Can credit score inquiries affect the score?

Credit score inquiries can affect your credit score depending on the inquiry you have made. There are two types of inquiries

• Soft inquiry: An inquiry that isn't registered on an individual's credit report is known as a soft enquiry. Soft inquiries are run by lenders on existing customers to see if one qualifies for the credit. Soft inquiries do not hurt the credit score.
• Hard inquiry: A hard inquiry occurs when you apply for a new line of credit. It means that a creditor has requested to look at your credit file to determine your creditworthiness. A hard inquiry may lower your scores by a few points, or it may have a minute impact on your scores. However, in most cases, a single hard inquiry is unlikely to change the credit score in a great way.

✅Why is a PAN card required for checking the credit score?

PAN is linked with all financial and bank accounts. PAN makes it easier to track financial details efficiently.

✅Is there a limit to requests for accessing credit score?

There is no such limit to request for accessing the credit score. However, individuals must limit the enquiries as it impacts the credits score negatively.

✅How do credit scores change?

There are various ways in which credit score change some of them are:

Positive changes in credit score due to

• Paying bills on time
• Reducing the credit
• Making an outstanding payment
• Limiting new credit request

Negative changes in credit score due to

• Defaulting in payments
• The high credit utilization ratio
• Applying for a lot of credit in a very short period

✅What are the factors that are included in the calculation of my credit score?

The factors which are included in the calculation of the credit scores are as follow:

• Credit utilization
• Payment history
• Credit history length
• Credit mix

✅Will the credit score be affected by owning multiple credit cards?

Having multiple credit cards would not necessarily lower an Individuals credit score, on the contrary, it can sometimes help individuals to build the credit score. However, if individuals have more cards than they can handle or use them irresponsibly, the credit score could drop considerably.

✅Can the (Credit Information Companies) change or delete my credit information?

The information on the credit score might be missing or inaccurate. In all those cases, Credit information Companies can change and delete the credit information provided individuals provide relevant details to back his claim.

✅Can I have more than one Credit Report?

There are multiple agencies for gauging the credit score of an individual. So, yes, individuals can have more than one credit report.

✅How can I build my credit score with no credit history?

Ways to build a credit score with no credit history are:

• Become an authorized user on another persons credit card
• Apply for a credit card
• Avoid applying for multiple credit cards at once
• Check the credit utilization ratio
• Pay EMIs on time

✅How to check my credit score online for free?

Individuals can get credit scores on MyLoanCare. Individuals are required to enter the personal and occupational details along with a PAN card to get the full credit report.