What, When & How of Credit Score Check Explained

Checking credit score is becoming a routine these days as people know the importance of it in the approval of loan or credit cards. At a time when a lot of credit applications are reaching the bank desk, chances of credit default have widened. And so, lenders assess the loan application from different perspectives. They not only make a credit score check but also have a keen eye on the repayment history of individuals before disbursing a loan or issuing a credit card. So, if you are yet to take a plunge in the world of credit, you must know the significance of credit score check. You can thus read this article which would detail the in and outs of credit score.

What is a Credit Score?

The credit score is a numeric representation of the repayment history of an individual. Individuals having a minimum repayment track of 6 months would be assigned a score from credit bureaus such as CIBIL, Experian, Equifax, etc. Of the credit bureaus that are mentioned, CIBIL is the one whose score is widely preferred by lenders across India. CIBIL scores range from 300 to 900, based on the repayment displayed by borrowers.

What is a Good CIBIL Score for Personal Loans?

Personal loans are a multi-purpose loan availed for travel, marriage, education, medical emergency, etc. The loan is accessible without the need of submitting any collateral or security. Since it’s not collateral backed, the credit default risk is on the higher side. As a result, lenders seek a credit score of 750 and beyond to approve the application. However, a score of 700-750 is also seen as good for approval. Applicants with a score below 700 would find it hard to get loan approval. To get the approval, they would need to submit a security, which could be anything from the fixed deposit, life insurance policy, postal deposits, etc. The loan would, however, be based on the value of the collateral. Generally, this type of personal loan is disbursed at 80%-90% of the collateral value.

What is a Good Score for Credit Cards?

Credit cards are often used to buy groceries, movie & travel tickets, clothes, mobiles and a lot more. You can use the card at both online or offline stores. As the credit card is generally issued without you submitting the security, the scope for default risk is high. This compels the lenders to approve applications supported by a credit score of 750 and above. However, if the score turns out to be poor, lenders can ask you to open a fixed deposit account first before being issued a credit card. The credit limit of the card can be ascertained at 80%-90% of the fixed deposit value.

What is a Good Score for Home Loan?

People are flocking to bank websites or branches to apply for home loans to buy a dream home. Home loans are financed to 75%-90% of the property value. As the home loan is a secured loan, it can be approved even with a low score. Yes, the interest rate can be slightly higher in that case with the bank charging more spread over the Marginal Cost of Lending Rate (MCLR), a benchmark adopted by the banks to price their home loans.

How to Make a Credit Score Check?

You can check the credit score on the official website of CIBIL. Follow the steps advised below to check the score.

• Log on www.cibil.com
• Scroll down to a link stating free credit score and report online
• Click on the link
• Create an account by writing your email ID as the username and entering the password conforming to the desired count of alphabets, numeric and special characters
• Mention your name, date of birth, choose the type of identity proof from the scroll and mention the ID number
• Proceed to the next step by clicking on the ‘Accept and Continue’ button at the bottom
• The second step would require the verification of the identity
• Subsequently, you can check the credit score, which would be free of cost once a year

You can even access CIBIL Free Report that would show the repayment details including your present and past debts, etc.

When to Check the Credit Score?

You must not check the credit score often as that lowers the same. At the same time, you must not apply frequently as lenders would make a hard credit enquiry, which could lower the score.. And when the loan applications get denied, the score reduces further.