What is a good credit score and why it matters for loans

A credit score is a three-digit number that reflects your creditworthiness. It is calculated based on your credit history, repayment behaviour, and financial habits. Lenders, including banks and non-banking financial companies (NBFCs) like Bajaj Finserv, use this score to assess your ability to repay loans and determine your eligibility for financial products.

In India, credit scores are generated by credit bureaus such as CIBIL (Credit Information Bureau India Limited), Experian, Equifax, and CRIF High Mark. Among these, the CIBIL score is widely recognised and ranges between 300 and 900.

Key factors influencing credit score calculations:

1. Repayment history: Timely repayment of loans and credit card dues has a significant impact on your score.
2. Credit utilisation ratio: The percentage of credit used compared to your total credit limit. A lower ratio is better.
3. Credit mix: A healthy mix of secured (e.g., home loans) and unsecured (e.g., personal loans) credit contributes positively.
4. Length of credit history: A longer credit history with consistent repayment behaviour boosts your score.
5. Credit inquiries: Multiple loan or credit card applications in a short period can reduce your score.

Bajaj Finserv assesses your credit score as part of its loan approval process. A higher score increases your chances of approval and may also result in better loan terms.

Credit scores are categorised into ranges that indicate your creditworthiness. Here is a breakdown of the ranges and their implications:

• 300–549 (Poor): Indicates a high risk of default. Loan approvals are unlikely.
• 550–649 (Fair): Moderate risk; limited access to loans or credit cards with higher interest rates.
• 650–749 (Good): Indicates responsible credit behaviour. Eligible for most loans and credit cards with favourable terms.
• 750–900 (Excellent): Reflects excellent creditworthiness. Offers high approval rates and the best interest rates.

Maintaining a score of 750 and above is ideal for securing financial products with competitive terms.

Good credit score range vs. loan and credit card eligibility

The table below highlights how different credit score ranges affect eligibility for loans and credit cards:

What is a good credit score for Bajaj Finserv personal loan and EMI card?

When applying for a Bajaj Finserv personal loan or EMI Network Card, having a good credit score is crucial. While the minimum requirements may vary, a credit score of 750 or above is generally considered ideal for approval. A higher score not only increases your chances of getting approved but also helps you secure loans at competitive interest rates.

For Bajaj Finserv’s EMI Network Card, a good credit score can help you access a pre-approved limit, enabling you to shop for your favourite products and convert purchases into easy EMIs.

Minimum credit score requirements for different types of loans

The table below provides an overview of the minimum credit score requirements for various types of loans:

Key factors that impact your credit score

Several factors influence your credit score. Understanding these can help you build and maintain a healthy score:

1. Payment history: Late or missed payments negatively impact your score.
2. Credit utilisation: Keep your credit usage below 30% of your total credit limit.
3. Length of credit history: A longer credit history with consistent repayments is beneficial.
4. New credit inquiries: Too many applications for credit can lower your score.
5. Credit mix: A balanced mix of secured and unsecured loans positively affects your score.

How to check your credit score online in a few simple steps

Checking your credit score is simple and can be done online. Here is a step-by-step guide:

1. Visit a trusted credit bureau website or the Bajaj Finserv customer portal.
2. Enter your personal details, such as name, PAN, and date of birth.
3. Verify your identity through an OTP sent to your registered mobile number.
4. View your credit score and download your credit report for reference.

Pro Tip: Regularly monitor your credit score to identify discrepancies and track your financial progress.

How to improve your credit score from low to good

If your credit score is low, follow these steps to improve it:

1. Pay all outstanding dues on time.
2. Reduce your credit utilisation ratio by keeping balances low.
3. Avoid applying for multiple loans or credit cards simultaneously.
4. Check your credit report for errors and get them rectified.
5. Maintain a healthy credit mix of secured and unsecured loans.

Pro Tip: Set up payment reminders or opt for auto-debit to avoid missing due dates.

Improving your credit score is a gradual process. Depending on factors like payment history and credit utilisation, it may take 6 to 12 months to see significant improvements. Consistent financial discipline is key to achieving a good credit score.

Common myths and facts about a good credit score

Here are some common myths about credit scores and the facts that debunk them:

1. Myth: Closing old credit cards improves your score.
   Fact: It can shorten your credit history and lower your score.
2. Myth: Checking your credit score frequently lowers it.
   Fact: Checking your own score is a soft inquiry and does not affect your score.
3. Myth: Having no credit cards is good for your score.
   Fact: A lack of credit history can make it harder to build a good score.
4. Myth: Paying off a loan immediately boosts your score.
   Fact: Timely repayments over the loan tenure are more impactful.

Dos and don’ts to maintain a good credit score consistently

Dos:

• Pay all bills and EMIs on time.
• Regularly monitor your credit report.
• Maintain a low credit utilisation ratio.
• Diversify your credit portfolio.

Don’ts:

• Avoid missing payments or paying late.
• Do not apply for unnecessary credit.
• Do not close old credit accounts with good payment history.

How Bajaj Finserv uses your credit score during loan assessment

Bajaj Finserv evaluates your credit score to determine your creditworthiness. A higher score indicates responsible financial behaviour, making you a favourable candidate for loans and credit products. While a good credit score increases approval chances, other factors like income and employment history are also considered.

Tips for Bajaj Finserv customers to build and protect a good credit score

1. Use your Bajaj Finserv EMI Network Card responsibly by making timely payments.
2. Set up alerts to stay updated on due dates.
3. Monitor your credit report regularly through the Bajaj Finserv customer portal.
4. Avoid over-utilising your credit limit.