CIBIL Score Ranges

Decoding CIBIL Score Range and Its Impact

July 22, 2023 • 1907 views

Your CIBIL (Credit Information Bureau India Limited) score is a three-digit numerical representation of your creditworthiness, credit history, and financial behaviour. It helps lenders assess your creditworthiness before approving any loans or credit applications. Usually, the higher the credit score, the better the chances of getting loan approval. This blog helps you understand the CIBIL score range, factors that affect it, and more. Keep reading!

CIBIL Score Range

A CIBIL score range is a categorisation of credit scores that helps lenders assess an individual's creditworthiness. It ranges from 300 to 900. A score above 750 is considered excellent and indicates a high creditworthiness, while a score below 300 is considered poor and reflects a high credit risk. The range is divided into levels that provide insights into an individual's credit profile and repayment behaviour.

5 Levels of CIBIL Score Range

The 5 levels of CIBIL score ranges are as follows:

1. Excellent (750 and above): This range indicates a high creditworthiness and increases the chances of getting credit easily with favourable terms.

2. Good (700-749): Falling within this range demonstrates good credit management skills and increases the probability of credit approval.

3. Fair (650-699): A score in this range suggests a satisfactory credit history but may require some improvement to access credit at favourable terms.

4. Average (550-649): Individuals with scores falling in this range might face difficulties in getting credit approvals. Lenders may charge higher interest rates or ask for collateral as security.

5. Poor (less than 550): This range signifies a higher credit risk, making it challenging to obtain credit facilities. Improving the credit score is crucial for accessing credit in the future.

Also Read: 6 Factors That Will Not Affect Your CIBIL Score

Why are CIBIL Score Ranges Different?

CIBIL score ranges differ based on the evaluation of an individual's creditworthiness. It allows lenders to assess the risk associated with lending to different individuals. Different ranges categorise people based on their repayment history, credit utilisation, and credit behaviour, helping lenders make informed decisions.

List of Factors Affecting Your CIBIL Score

Several factors influence your CIBIL score like:

1. Payment History: Timely payment of dues, such as credit card bills and loan EMIs, positively impacts your score.

2. Credit Utilisation: The proportion of credit you utilise affects your score. Maintaining a low credit utilisation ratio is favourable for your score.

3. Credit Mix: A diverse mix of credit, including both Secured and unsecured loans, can positively impact your score.

4. Credit Age: The length of your credit history is an important factor. Having a longer credit history is an indication of your creditworthiness. 

5. Credit Inquiries: Multiple credit inquiries within a short period can negatively impact your score, indicating increased credit risk.

Also Read: How to Rectify CIBIL Report Mistakes?

Tips to Improve Poor CIBIL Score

To improve your CIBIL score, you can:

1. Pay Your Bills on Time:

Timely payments establish a positive credit history and help improve your score.

2. Reduce Credit Utilisation

Keep your credit utilisation ratio below 30% to indicate responsible credit usage.

3. Regularly Check Your Credit Report

Identify any errors or discrepancies in your credit report and report them for correction.

4. Avoid Multiple Loan Applications

Multiple applications can negatively impact your score. Apply for credit only when necessary.

5. Maintain a Healthy Credit Mix

Having a balanced mix of secured and unsecured credit helps boost your score.

How Do CIBIL Score Ratings Affect Your Loans?

Your CIBIL score significantly affects your loan eligibility and borrowing terms. Lenders consider your CIBIL score to assess your creditworthiness and determine the interest rates and loan terms they offer you.

A higher score increases your loan approval chances and allows you to negotiate better interest rates and repayment terms. On the other hand, a lower score may result in rejection or increased interest rates.

To Conclude

Understanding the CIBIL score range and its value is crucial when seeking credit facilities. Maintaining a good CIBIL score is essential for accessing credit at favourable terms. Keep a track of your CIBIL score so that you don’t face any hassles while applying for a loan or credit card. Take the necessary steps to improve your CIBIL score.  To check your score for free, click on ‘Free CIBIL Score’ on the Poonawalla Fincorp website.

Frequently Asked Questions

  • Can you have no credit score?

Yes, if you have never taken any credit or loan, you may not have a credit score. In such cases, it is recommended to start building your credit history by opening and maintaining credit accounts responsibly.

  • Why does the credit score not start from 0?

The credit score does not start from 0 because credit bureaus evaluate creditworthiness based on an individual's credit history. Since zero credit history doesn't provide enough data to assess creditworthiness, a score cannot be generated.

  • Will you start out with a credit score of 300?

Not necessarily. If you have a limited credit history or a few negative credit events, your initial credit score might be lower than 300. It is important to work towards improving your creditworthiness.

  • Is a CIBIL score of 630 considered good?

A CIBIL score of 630 is in the fair range. While it is not considered excellent or good, it still indicates that you have a moderate level of creditworthiness. With timely payments and responsible credit management, you can strive for a higher score.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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