CIBIL Score Ranges: All You Need to Know

An individual’s CIBIL score is one of the very first things that a lender looks into while considering a person for a loan for any form of credit. One can also perhaps say that It is fairly reasonable to equate the credit score to the marks achieved on the school report card. That can be said as a high CIBIL score is seen as a sign of good financial management skills and exemplification of a healthy credit behaviour. These scores tend to stay within the range of 300-900, with anything above 750 being considered ideal. If, for example, a borrower has a CIBIL score of 900, the loan and credit card approvals are guaranteed and the borrower can avail them at fairly low rates of interest as well. This is just one of the many interpretations of a CIBIL score. Read on to understand how one should interpret those three-digit-figures that appear on a borrower’s credit report.

Understanding CIBIL score ranges

CIBIL scores can range anywhere between 300 and 900, with 900 denoting maximum creditworthiness. In other words, if your CIBIL score is inching towards 900, then just by arriving at banks and financial institutions’ doorstep, they can roll out the red carpet for you.

• CIBIL Score Range 700 - 900

This score range places you in the top creditworthiness bracket and, if you approach lenders, they will be generally very optimistic. The score indicates that you have wisely used your credit cards, paid your card fees, repaid loans on time, did not run up huge debt, and are typically a financially responsible person. You are a low default risk in trade parlance. The best rates will be offered to you as well, interest wise.

• CIBIL Score Range 600 - 700

You're not in the top tier as well as you will get the loan at a higher rate of interest comparatively. Those with credit scores ranging from 600 to 700 are commonly seen as "subprime borrowers," which means that qualifying for better loan terms could be more difficult to find. This range implies that payment has been delayed or defaulted a number of times in the past. Personal loans can be hard for a bank to approve and hefty interest can be charged by a private financier.

• CIBIL Score Range 500 - 600

A little bit of free spending on your money? You may need to focus on the practicality of your finances. Although your credit score might mean that having a loan would be really hard, you should work on improving your CIBIL score. Pay credit card bills on time, repay loans on time, maintain the correct credit mix, and generally avoid activities with lenders or credit agencies that raise red flags.

• CIBIL Score Range Below 500

Has your application been rejected? Your loan or credit card application is unlikely to be approved by banks or financial institutions because your past is likely to be riddled with defaults and delayed payments. You're going to have to work hard to increase your ratings. It's going to take time, but not impossible.

Each time an individual applies for a personal loan, a credit check on the financial health of the potential borrower is performed by the bank or lending institution. That is, they are seeking a high credit score from CIBIL. In most cases, a CIBIL score of 750 plus is considered suitable for making use of a personal loan. If you wish to avail a Bajaj Finance Personal Loan on Finserv MARKETS, your score should preferably be above 700.

It pays to have a good score. A high credit score will get you loans that are better and faster. However, for those individuals who have an immediate need for capital, a low CIBIL score can be terrifying as this can adversely affect their borrowings. All isn't lost, however. With these smart moves, you can build up your credit score.

1. Pay your dues on time.

2. Maintain a healthy credit mix.

3. Apply for new credit within your limit.

4. Review your credit history frequently throughout the year.

5. Build up a good history gradually.

Credit Score Impact

The impact of credit score is as follows:

• The ‘Excellent’ Rating: An ‘Excellent’ credit score essentially sends the message that the borrower consistently pays his/her loan instalments and credit card bills on a timely basis and has nothing but positive marks on their credit report. Lenders also tend to find it very hard to say no to such borrowers. Such a credit score essentially implies that one will get various perks such as swift loan approvals,  favourable rates of interest and deals on all kinds of loans.

• The ‘Good’ Rating: Credit Score of a majority of individuals fall in the ‘Good’ category. People with credit scores that stay in this particular range have fairly good chances of getting their loan application approved as it speaks to the dependability of the borrower. However, the same also implies that some risk is going to be attached to the borrower in question. Hence, depending on the lender, one may or may not get several loan benefits as one might have expected.

• The ‘Fair’ Range: Fair credit scores indicate that borrowers have neither performed too well or bad in terms of managing their loan payments and bills. There is a very good chance that such people will not be able to get a loan, and even if they do, they will end up getting the same at a very high rate of interest and down payment.

• The ‘Poor’ Range: The people who have a ‘Poor’ credit score absolutely stand no chance when it comes to securing a loan from a lending institution. These people come with the highest possible amount of risk attached. Poor credit scores make banks and other financial institutions very wary of people that have poor credit scores since to them, such borrowers will almost certainly default and are untrustworthy. It is also an indication of the borrower’s unstable position, financially speaking. Poor credit scores also say that the borrower may have excessive debt, or missed past repayments. Such borrowers will only stand a chance of securing a loan if a guarantor vouches for them.