Hello Reader! Let’s dive into credit score right away and learn about credit score / CIBIL score, Credit score free check, credit score check free so that you have all the required information.
- What is a Credit Score?
- Why is the Credit Score Important?
- What Is Considered To Be a Good Credit Score?
- How is the Credit Score Calculated?
- How To do a Credit Score Free Check ?
- What Can Be The Reasons For A Low Credit Score?
- The Bottom Line
What is a Credit Score?
A credit score is also known as a CIBIL score. It is a 3-digit number that indicates how well you are at managing credit like personal loans, home loans or credit cards. The CIBIL score is a measure that determines your ability to borrow that is dependent on your previous performance.
In layman terms, the credit score demonstrates whether you are a reliable borrower and the likelihood of you repaying the new loan on time. In any case, if you need a loan or credit card, the NBFC or lender bank will first have a look at your credit score in the credit report.
A credit score is usually calculated out of 900. Lenders lookout for credit above 750. The higher your credit score, the higher likelihood of you getting new credit. The credit score or CIBIL is a credit bureau that calculates and maintains your credit score.
There are many free websites wherein you can do a credit score free check. They allow you to check, track and manage your credit score at zero cost. However, do take note that checking your credit score does not have an impact on your credit score.
Why is the Credit Score Important?
The credit score is a numerical expression that represents the credibility of an individual. A credit score is based on a credit report and information that are sourced from several credit bureaus.
Similarly, the score is based on credit history that includes the number of active accounts, total debts, repayment history alongside other factors. When an individual needs a loan, the lender first has a look at the credit score for evaluation.
If the credit score is above 750, then the request or application for the new loan is approved. Besides, the lender will also analyze other factors to determine credibility.
This is why maintaining a good credit score is the safest way to improve your chances of approval. On the other hand, if the score is way too lower, then the lender might directly reject the application without looking at any other factor.
As a matter of fact, the credit score is not the only thing that the lender evaluates before approving a requested loan. They also consider your debt to income ratio, profession, employment history, and more factors before they go ahead to approve or disapprove the request.
What Is Considered To Be a Good Credit Score?
Ever since the world has been hit by the pandemic, people have been struggling to meet ends. A lot of people look for loans during such difficult times which is why the banks or lenders have raised their eligibility scores to 760. Individuals who have a score above 760+ are considered to be eligible for new loans.
It becomes easier to get a new loan or a credit card if you have a higher credit score. Every credit bureau calculates the credit score using a different method. Thus, there may be a slight difference in the credit score among the various credit bureaus.
It is quite normal to have a CIBIL score above 760 in one bureau and a credit score of around 700 in another credit bureau. So, this is why you must keep a check on your credit score in different bureaus. Thus, it is advisable for individuals to do a credit score check free at least once in 3-4 months.
How is the Credit Score Calculated?
A credit score isn’t only dependent on your past repayment history. There are a lot of other factors that come into consideration before a lender approves your request for a new loan or credit card. Here are some key factors that can influence credit scores.
1. Duration of Credit History
If you have a loan or a credit card for a longer duration of time and have made monthly payments towards it, this shows your disciplined credit behaviour. This has an impact on your credit score.
2. Loan Repayment History
If you miss out on the monthly EMI’s or make late payments, then this has a huge effect on your credit score. It is best to make your payments timely to boost your credit score significantly.
3. Number of Hard Inquiries
When an individual requests for a new loan or credit product, the lender first inquires about the credit score. Such types of inquiries by financial institutions like banks or lenders are called hard inquiries. A high number of hard inquires can affect your CIBIL score negatively. It indicates that you are a credit hungry individual who is always in need of cash.
How To do a Credit Score Free Check ?
There are several various websites wherein you can check the credit score at absolutely no cost. If you do not know how you get going with the same, simply follow these steps given below to find out your CIBIL score. for example credit score check free by experian
Step 1: Visit any credit score checking the website.
Step 2: Here, you will need to fill in several parameters like your gender, Name, Date of Birth, Pin Code, PAN card, email id, address along with mobile number as well.
Step 3: After entering all of the details accurately, hit the submit option. And there you have it. Your credit score along with other important parameters will be displayed to you.
What Can Be The Reasons For A Low Credit Score?
There can be several reasons that can account for a negatively impact on your credit score. Here, we will discuss some of the factors that can affect your credit score.
• A high number of hard inquiries can affect your credit score negatively
• Errors in the credit score can lower your CIBIL score.
• Late or missed payments towards home loans, personal loans or credit cards.
• A high credit utilization ratio can lower your credit score.
The Bottom Line
So, in this article, we spoke in length about what a credit score is along with different factors associated with the same. We hope that this write up helps you understand CIBIL scores better. In case you have any more doubts or queries for us, please feel free to get in touch. Also, let us know how you liked the article. Last but not the least, consider sharing it with your friends and family.
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