The first step in maintaining a good credit score is to understand more about it. Let’s look at what a good credit score is and how you can maintain it.
Your credit score is a three-digit number that indicates your past credit behaviour and defines your creditworthiness. Your credit score is not permanent. It changes with healthy credit practices.
What is a credit score?
A credit score ranges from 300 to 900 and is a numerical rating that measures your likelihood to repay a debt. A lender, like a bank or non-banking financing organisation, will evaluate your credit score to decide whether to give you a loan. The amount of the loan that is approved and the interest rate that you will pay on the loan are both influenced by your credit score.
What is a good credit score?
A credit score above 700 is considered a good credit score. Banks, NBFCs and other online lenders prefer applicants with a credit score in this range. If your credit score is in this range, you will be eligible for most loans and credit cards.
The following table will help you understand the credit score range and its meaning.
|300 - 650||Your credit score is Poor
|650 – 699||Your credit score is Fair
|700 – 749||Your credit score is Good
|750 – 849||Your credit score is Great
|850 – 900||Your credit score is Excellent
The highest possible CIBIL score in this range is 900, while the lowest is 300. Therefore, the higher your credit score, the more likely it is that your credit application will be approved quickly with better borrowing terms.
How to maintain a good credit score?
- Pay your EMIs on time
- Monitor your credit utilization ratio
- Maintain a healthy and long credit history
- Check your credit report regularly
- Avoid multiple or frequent enquiries
- Get a mix of credit (secured and unsecured)
For example, Rahul has a mix of loans and credit cards. He has been paying his EMIs and loan repayments on time. He has been monitoring his credit behaviour on a regular basis by checking his credit score and credit health report. Over time, he noticed that his credit score improved. However, this process was tedious and time-consuming as he had to visit different portals to check his account summary, credit health report, etc.
Now that Rahul signed up for our Credit Pass, he was able to track his credit health in one place. With the Bajaj Finserv Credit Pass, he could check your credit score anytime, get his personalised credit report, access tools, and pre-approved loan offers.