What Does a Credit Score Really Tell You?
Last Updated : July 10, 2020, 2 p.m.
A credit score is a three-digit number representing your credit behaviour. It ranges from 300 to 900 in India and is given to individuals based on a repayment track spanning for at least 6 months to a year. But what credit score you will get depends on how you manage your debts. Even important is to understand the significance of different scores and why you have got such scores. If you want to understand the same, keep reading this post.
Let’s Segregate Credit Scores in Different Parts First
Credit scores can be divided into – Above 800, 750-800, 700-750, 600-700, 300-600 and 0 to -1. All these scores speak different things and are obtained due to different reasons.
What Does a Credit Score of Above 800 Tell About You?
A credit score of more than 800 is an excellent one and can help you grab exciting credit deals such as low-interest rate personal loans, credit cards with exciting cashback and discount offers. If you have got such a score, it means you have paid your debts on time, utilized the debt smartly, and ensured a near-perfect credit utilization ratio. Keep up the good work to maintain this score and get rewarded with even better credit deals.
What Does a Credit Score of 750-800 Mean?
A credit score of 750 to 800 is considered very good in the eyes of lenders and can result in fast loan approvals and disbursals along with exciting credit cards. Surely, you must have worked hard in achieving such a score. You must have made loan and credit card payments on time while also ensuring optimum utilization of the credit limit.
Will the Credit Deals be Less Exciting If You Have a Credit Score of 700-750?
Firstly, the credit score of 700-750 is considered good by the lenders and they give approvals based on the same. Yes, the credit deals may not be as good as when you have a score of more than 750 or beyond 800. But they will still be attractive for borrowers. Like you can get all types of loans, be it unsecured and secured, even if the credit score is below 750 but above 700. Maybe, if you keep paying your dues on time, your score will most likely be more than 750 and could go even beyond 800. Yes, that will require patience and perseverance while handing debts. So, display that and get rewarded.
Will I be Offered a Loan or Credit Card If My Credit Score Comes Within 600-700?
A credit score below 700 will most likely result in the rejection of personal loan and credit card applications. However, you can get a home loan albeit at a higher rate of interest. Even the option of a secured credit card against a fixed deposit is available for you. Maybe you will have missed payments for at least 3-9 months. Get your repayment track in order by paying your dues on time. In case the poor income situation is causing a payment skip or delay, take help from your friends and relatives and pay the overdue amount. Once your income situation improves, pay off the money you borrowed from your dear ones and continue paying dues on time. Gradually, the credit score will improve.
What Happens If I Get a Credit Score of 300-600?
It is a poor credit score and could be due to a loan or credit card default for long. The situation could deteriorate fast and get worse if you don’t control it. You can go for a debt settlement to relieve yourself of the debt burden. With a debt settlement, the debt amount will be reduced so that you can pay the same. Although debt settlement is not a good option as it leaves a label of ‘Debt Settled’ in your credit report, it is still better than getting assigned the tag of ‘Wilful Defaulter’. Yes, lenders will not approve unsecured loans when you apply in the future. But you can still get a secured credit card against a fixed deposit and build your credit score quickly.
What Does a Credit Score of 0 to -1 Mean?
It means you either don’t have a credit history or it’s not showing in your credit report as the history has been much older. Usually, credit records remain in your credit report for at least 7 to 10 years from your last payment. Now you may wonder whether the lender will trust you in such a situation. Home loans and other secured loans will be granted to you. As far as personal loans are concerned, they can also be given based on a salary account relationship or if you are working in a reputed company.