Credit scores are a measure of a person's prudent credit behaviour. Lenders always prefer individuals with a strong credit score. Most lenders nowadays use a credit score to gauge a person's creditworthiness. Apart from determining a prospective borrower's eligibility, a credit score also influences the amount of loan that an individual is qualified for as well as the loan's interest rates.

If you're unsure about what defines a decent credit score or how it's generated, we've got you covered. Continue reading to learn everything there is to know about a good credit score and the numerous advantages it provides.

What is a credit score?

A credit score is a three-digit value that varies from 300 to 900. It is an indication of a person's creditworthiness. Before approving your credit application, lenders look at your credit score. In every loan or credit application, a strong credit score is unquestionably a winner. A credit score of 750 or more is regarded to be excellent.

Credit bureaus in India, such as Equifax, CIBILTM, ExperianTM, CRIF High MarkTM, and others, generate credit scores. Because each credit bureau uses a different formula to calculate credit ratings, credit scores may differ slightly.

What is Considered a Good CIBIL™ Score Range?

An outstanding credit score is one that ranges from 750 to 900 points. Candidates with credit scores in this range are preferred by banks, NBFCs, and other online lenders. Most credit products will be available to you if your credit score falls within this range. The table below will assist you in comprehending the CIBILTM score range and its meaning.

Credit Score Range


What it means

750 – 900


Eligible for low-interest rates and higher approval chances

700 – 749


Can become eligible for better interest rates

650 – 699


The options are limited, but credit approval is possible.

600 – 649


Higher interest rates on loans and credit card approval could be harder

Below 600

Immediate Action Required

Approval chances are very low


As seen in the table, a credit score of 750 or higher is considered outstanding and can assist in obtaining a variety of credit opportunities.

How Can You Maintain A Good Credit Score?

Responsible credit behaviour leads to a good credit score. Some of the variables that will assist you in maintaining a good credit score are as follows:

Consistent Repayment: Your payment history accounts for almost 35% of your credit score calculation. Your payback record should be 100 percent positive if you want to retain a decent credit score all of the time. You must make certain that you never miss a payment in order to do this.

Low Credit Utilisation: Keeping your credit card use ratio below 30%, according to experts, can help you build a solid credit score over time. It implies that you are not in need of credit. A strong credit score can be harmed by exceeding credit card limits or failing to pay bills on time. As a result, only use your credit card when absolutely necessary or in an emergency when you can't pay with cash.

Credit Diversification: Lenders frequently check your credit history to see how diverse your credit exposure is. Having a diverse credit mix reflects well on your credit report and aids in maintaining a decent credit score. To achieve a good credit mix, use a credit card and choose both secured and unsecured loans.

Avoiding Multiple Credit Applications: You may find yourself applying for a number of credit cards or loans in the hopes of finding a suitable choice. This, however, may have a negative impact on your credit score. When you apply for credit, the lender initiates a rigorous inquiry. Multiple hard inquiries will have a negative influence on your credit score. If your credit application is turned down, lenders will be hesitant to extend you credit in the future. To preserve a decent credit score, avoid applying for various credit choices.

Length of Your Credit History: It will take a few months for your credit score to be updated after you apply for your first credit. This could last anywhere from three to six months. Due to a lack of credit history, this makes it difficult for the lender to evaluate your credit profile. A long credit history aids in gaining a thorough picture of your credit behaviour, which is vital for credit acceptance. As a result, maintaining a strong credit score requires a focus on being credit active and borrowing on a frequent basi.

Closing Old Credit Cards: If you have a lot of credit cards open at once, you might consider closing the ones you don't use. Closing an old credit card, on the other hand, can have a negative impact on your credit score. This is because your credit score is equally affected by the duration of your credit history. As a result, carefully consider the credit card choices that can be closed to avoid unnecessary debt accumulation.

Avoid Paying Only Minimum Due: Most credit card companies allow you to pay as little as 5% to 10% of the outstanding balance as the minimum due. You'll be able to prevent a late payment or default this way. The remaining balance, with interest, is carried over to the next billing cycle. If you want to avoid accruing interest in the long run, strive to pay the entire bill rather than just the minimal amount required. Always pay on time and in full to preserve a decent credit score.

Score Builder Loans: There are currently exclusive loans available on the market for new credit users with no prior borrowing history. Score-builder loans are what they're called. These loans may be for a smaller sum and are primarily used to improve one's credit score. You will have a positive credit score if you repay the loan on time, which will make you eligible for a variety of other credit products with better terms.


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