Interesting Facts About Credit Score
Knowing your Credit score is essential for applying for a Personal Loan or credit card. Credit bureaus generate this 3-digit number based on an individual’s past credit history and credit length. It ranges from 300 to 900, and the minimum score required for Personal Loan applications is 630 or above. The higher the score, the easier it is to avail of a loan.
The credit score is fundamental when we talk about loan applications and approvals. It is an integral part of loan processing, as it helps determine an individual’s creditworthiness. Applicants with a high credit score get faster approvals and qualify for bigger personal loans at lower interest rates. Understanding the working of credit scores helps maintain the rating and paves the path to planned improvement. So, here are a few interesting facts about credit score one must know.
1. An individual can check the credit score innumerable times
Many people believe that checking their credit score frequently affects it negatively. One can request the score as often as they want, as it does not count as a hard enquiry. Checking the credit score is a soft enquiry that does not impact the rating. However, it gets affected if a lending institution or credit card issuer checks it for your creditworthiness.
2. One can check the credit score entirely online
Checking the credit score is possible without handling paperwork or physically visiting the lending institution’s office. However, many people don’t know how to check their credit scores online. To do that, visit the credit bureau’s website, fill in a few required details, confirm the request, and get your credit score. Many reputable NBFCs like Clix Capital also have an online credit checking tool on their website to help applicants check their scores quickly for free.
3. No credit rating does not mean a perfect credit score
Many presume that not having a credit history, which means not having a credit card or not taking a loan, will mean a perfect credit score. On the contrary, those with no credit history have a more challenging time applying for a loan. Since lending institutions rely on an individual’s credit score to determine their creditworthiness, those who have never taken a loan cannot prove their repayment history. As a result, they cannot calculate their score and qualify for a loan.
4. Different credit bureaus may generate different credit scores
India has four major credit bureaus: Experian, CIBIL, CRIF High Mark, and Equifax. When you request a credit score, you can get different scores from them. The reason is that every bureau has unique scoring models. Additionally, your lending institution may not report your credit information to all credit bureaus on the same day, causing discrepancies in the credit score.
5. Credit score has nothing to do with an individual’s savings or investment accounts
Credit bureaus calculate credit scores based on an individual’s past and ongoing credit activities. The credit report also contains a summary of all credit accounts. An individual’s fixed deposits, Demat accounts, saving accounts, trading accounts, etc., have no reflection on the document.
6. The credit score exists even if you never requested it
A lot of individuals believe that they have no credit score because they never asked for it. However, everyone with a loan or credit card has a credit score based on their credit history. Lending institutions and credit card providers report every borrower’s credit-related information and activities to the credit bureaus. Therefore, the credit score still exists even if you never asked for it
7. A low credit score does not necessarily mean that you cannot get a loan
Although most NBFCs prefer applicants with a high credit score, low-score individuals also have chances to get loan approval. Some lending institutions like Clix Capital can still approve a loan application, provided that the applicant has an Experian credit score of 630 or above. They also check the applicant’s salary, debt-to-income (DTI) ratio, employment, etc. However, they should be ready to pay a higher interest rate on their loans than average.
Building the credit score is a gradual process. Consistent repayment habits and handling credit responsibly help maintain a high score. Don’t know how to check your credit score? Visit Clix Capital’s website and follow the instructions on their credit checking tool.