You might have heard a lot about CIBIL scores and know they are good indicators of your creditworthiness. However, if you’re not sure what the exact meaning and significance of CIBIL scores are, here’s a guide to tell you what is good CIBIL score and what factors go into it.
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What is a CIBIL Score?
To understand what is good CIBIL score, we need to first understand what CIBIL score is.
A credit or a CIBIL score is a three-digit figure that indicates how successfully you have handled credit in the past, such as a home loan, personal loan, or credit card. It measures your borrowing capacity based on how you have used credit before.
Simply put, your credit score informs lenders about your reliability as a borrower, your chance of defaulting on new loans, and other factors.
Now that we have enlightened you about CIBIL score, let’s know what is good CIBIL score and why is it important to have it.
Why is a Good Credit Score Crucial?
One of the first things a bank or NBFC will consider when analysing your loan or credit card application is your credit score. The approval or rejection of your application by the lender depends on whether you have a good or a poor CIBIL score.
To assess whether the application is creditworthy, the lender will check into further information if the score is high. Therefore, having a high credit score increases the likelihood of your loan application being accepted.
A good CIBIL score may also lower your loan’s interest costs and make it easier for you to get financing. Many banks and NBFCs offer candidates with good credit preferentially cheap interest rates.
How does the gold price in India affect your CIBIL score? It is not easy for the people in India to buy gold as they need a considerable amount of money. Most of them have savings,
which is often used to run their family; in this instance, being able to buy gold would be intricate for them.
As the gold price in India has seen a surge of 6.5%, gold loan is also a new thing nowadays, and most people don’t know what it is or why they need it. While 45% of Indians already listed their assets and investments with CIBIL score, 25% of citizens are left to do so.
How are Credit Scores Determined?
Before we understand what is good CIBIL score, here are the main factors that determine credit scores that you should know about:
- Loan Repayment History
- Duration of Credit History
- Number of Hard Inquiries
- Credit Utilization Ratio
- Credit Mix
Other factors, such as mistakes in your credit report, a lack of credit history, and your inability to fulfil your obligation as a loan guarantor, may have a very slight negative effect on your credit score.
What is Good CIBIL Score?
“What is good CIBIL score”, that’s what most people ask. Here’s the answer:
A credit score from CIBIL or another credit bureau of 760 or higher is now regarded by most lenders as outstanding. Therefore, a good CIBIL score of 760 or higher makes it somewhat simpler to have your loan or credit card application accepted.
A credit score below 700 from a different bureau can coexist with a good CIBIL score of 760 or higher. You should therefore monitor your credit score across all bureaus. In addition, once every three to four months, it is advised to check your credit score.
Let’s examine the credit score range that most lenders and bureaus consider when assessing your credit applications:
- Over 750- Very Good
- 701-750- Fair
- 601-700- Low
- 300-600- Very Low
Advantages of Keeping a High Credit Score
Now that we know what is good CIBIL score, here’s a point to note:
Good CIBIL score is not the only factor that lenders consider when evaluating a loan or credit card application, but it is undoubtedly one of the most significant. There are various advantages of keeping a high credit score:
- The likelihood that your loan applications will be granted will increase because a good CIBIL score shows excellent creditworthiness and lower risk to the lender.
- Less expensive loan interest rates are more likely to be offered to you.
- You may easily and quickly have your loan and credit card applications approved.
- Based on your qualifications, you have access to pre-approved loans.
- On your credit cards, you can get a bigger limit.
- Reduced processing costs and other costs
Final Thoughts
We now know what is good CIBIL Score,
A good CIBIL score is 700 points or higher. 750 and higher credit scores are regarded as outstanding. People with strong credit scores can get any loan or credit card. Good-score borrowers may also qualify for lower loan rates.
Also Read: How do credit cards work? Everything you want to know about Credit Card
