A CIBIL score is a credit rating assigned to borrowers based on their past credit record. CIBIL scores can range between 300 and 900. A credit rating above 750 is considered a good CIBIL score. An individual has a better chance of getting a credit card or loan with a higher score (900) as compared to a low score (300). The credit score assigned by CIBIL depends on multiple factors such as loan repayments, frequency of credit inquiries, credit limit usage, the current status of existing loan accounts, late payments, etc.
CIBIL Score Range: Good vs Bad?
- 850 – 900 = Excellent
- 750 – 850 = Good Score
- 700 – 750 = Decent Score
- 650 – 700 = Mediocre Score
- Below 650 = Bad Score
What Is A Good CIBIL Score to get a loan or credit card?
Lenders like to extend credit to applicants with a good CIBIL score. As a rule of thumb, individuals with a CIBIL score over 750 will find it easy to get a loan or credit card approved. A score above 750 will also give one access to excellent credit terms and offers from multiple financial institutions. A good score assures the lender that the applicant makes payments on time, does not have an intent to default, and is compliant ensuring a low-risk customer.
Borrowers with CIBIL scores between 650 and 750 have a low chance at credit approval, but may still get access to credit. However, terms on the offer may not be very flexible as compared to those with a higher credit score. The credit card or loan approval process for such applicants usually takes longer subject to multiple verifications.
CIBIL scores below 650 are not considered very credit worthy because of their past credit history. The low score may have been caused due to a default among other reasons. You can improve your credit score by being more informed on making better credit choices.
Benefits of a good CIBIL score
The benefits of having a good credit score go beyond getting access to credit. Here is a look at how one can gain from a good credit score
- Easy access to credit: Banks are aggressively trying to push their products to borrowers with good credit scores. According to CIBIL, 79% of loans are approved for individuals with a CIBIL Score greater than 750. This usually means shorter processing times, quick disbursals, and larger lines of credit.
- Low interest rates: Banks set their slabs on interest rates based on borrowers’ credit scores. For example, a car loan for someone with a credit score of 650 will cost atleast 1% APR more than a borrower with a credit score of 800.
- Best-in-class benefits: Financial institutions reserve their best credit cards for borrowers with the best credit scores. Banks want to sell the least risky customers more of their products, and thus use aggressive benefits and offers to target borrowers with high credit scores.
To be informed about your own credit score, you can get a free credit report on check CIBIL score by PAN Card.