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What is Experian Credit Score

An Experian credit score is a three-digit figure ranging from 300-850. Experian, one of the four credit bureaus operating in India, assigns this credit score. An Experian credit score is an indicator of your loan repayment capability and overall creditworthiness. Essentially, it helps lenders decide whether you are eligible for a credit card or a loan. The higher your Experian score, the better are your chances of getting credit. Read on to know more about Experian scores.

What is Experian Credit Information Report

An Experian credit information report (CIR) is a detailed summary of a borrower’s credit behaviour and history. It is also a record of your active credit card and loan accounts and your repayment history. Additionally, it is home to the records of all the enquiries made by financial institutions where you applied for credit. These bits of information also help the credit bureau determine your Experian credit score.

How to Check Your Experian Credit Score Online

You can easily get your Experian Credit Report or Experian Credit Score from the official portal of Experian itself for a nominal fee of ₹399 (inclusive of taxes). All you must do is fill up an online form and authenticate yourself by answering a few questions concerning your credit portfolio. Once your identity has been successfully authenticated, you will promptly be shown your Experian Credit Information Report and credit score in real time. A copy of the same will also be sent to you on the registered email address.

How Does Experian Calculate Credit Scores

Experian calculates credit scores with the help of the FICO credit scoring model. It basically means that it takes certain aspects of your credit information into account and assigns each one of those variables a weightage. The elements that Experian takes into account and the weightage that is assigned to them are as follows:

Factors

Weightage (Expressed in % terms)

Credit Mix (ratio of secured loans and unsecured loans)

10%

Credit History (loans and credit cards availed by you in the past)

15%

New Credit (loans and credit cards that you have availed in the recent past)

10%

Payment History

35%

Amount Owed

30%

Why is Experian Credit Score Important

Your Experian credit score basically is an indicator of your loan repayment capability and is, in fact, the first thing that lenders check when you submit a credit card/loan application. Hence, if you want to stand a chance of getting a loan or a credit card from a financial institution at attractive repayment terms or borrowing rates, you must ensure that your Experian credit score is in a range that lenders consider ideal (between 750-850). If your Experian credit score is lower than that, you may get a loan or credit card at unfavourable repayment terms. If your credit score is even lower (below 650), chances are that your credit card/loan application will get rejected.

How to Improve my Experian Credit Score

You can improve your Experian credit score in the following ways:

1. Repay Your Loan/Credit Card Bills on Time: One surefire way to improve your Experian credit score over time is by making timely loan/credit card bill payments. If you can, consider partially or fully prepaying your loans and outstanding credit card dues as well.

2. Maintain a Low Credit Utilisation Ratio: Financial institutions recommend that you should not use up more than 30-40% of the credit available to you at any given time, as it is recorded in your credit reports. If you are utilising more than 40% of your available credit, chances are that you may come across as a credit-hungry individual and the lender may even reject your application

3. Do Not Close Old Credit Cards: It is recommended that you never close your old credit cards as they essentially tell a story of your credit behaviour over several years. If you have been repaying your credit card dues on time over several years, it can impact your Experian credit score positively.

4. Maintain a Healthy Credit Portfolio: You must always aim to maintain a healthy mix of secured and unsecured loans. A dominance of unsecured forms of credit in your credit portfolio can bring your Experian credit score down.

5. Get New Credit Cards: If you get a new credit card, the available credit to you automatically increases to the extent of the limit of your new credit card. This new addition to your available credit will automatically bring your credit utilisation ratio down, which will eventually improve your overall credit score.

Benefits of Obtaining Your Experian Credit Information Report

If you obtain your Experian credit information report, you will find out exactly where you stand in terms of loan eligibility. Also, since Experian credit reports are detailed records of your credit behaviour, you will be easily able to report any inconsistencies, discrepancies, or potentially fraudulent transactions or instances of identity theft.

If left unchecked, these anomalies can bring your Experian credit score down, making it difficult for you to get a loan or credit card in the future. If you do spot such anomalies, you must report the same to Experian so that you can prevent them from causing a downfall in your creditworthiness.

Factors That Affect Your Experian Credit Score

Some of the factors that affect your Experian credit score are as follows:

1. Your Repayment History: The frequency with which you repay your outstanding credit obligations affects your credit score greatly. You will have a healthy credit score and it will remain healthy if you make timely payments. Late or missed loan/credit card payments, on the other hand, can cause a downfall in your credit score.

2. Your Credit Utilisation Ratio: If you have a healthy credit utilisation ratio (about 40% or less), you will have a healthy credit score. If you go past the 40% mark, your Experian credit score can fall as a consequence.

3. Your Credit Mix: The ratio of unsecured to secured debts in your borrowing portfolio also determines your credit score. If unsecured credit makes up for a major portion of your credit portfolio, you may want to consider balancing it out with secured forms of credit.

4. Number of Hard Enquiries: If you apply for multiple loans or credit cards in a short span of time, this could spell disaster for your Experian score. Whenever you apply for credit, lenders make a hard inquiry on your credit score, which is later recorded in your credit information report. Too many hard enquiries in a short period can give the lender an impression of credit-hungry behaviour; hence, you must not apply for loans and credit cards too often as it will make the lenders make multiple hard enquiries against you in a short timeframe, thus negatively affecting your credit score.

Services Provided by Experian

Some of the services Experian offers are:

  • Experian facilitates access to loans and other financial services as well as fraud prevention.

  • Experian facilitates insurance eligibility checks and claims.

  • Experian also alerts its customers if there is any kind of change in their credit score/report.

  • Experian also helps protect your identity while you are shopping online.

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FAQs on Experian

  • ✔️What is a good Experian credit score?

    A good Experian score is anywhere between 750-850 as when your credit score is in this range, the lender thinks of you as a creditworthy individual.

  • ✔️What is Experian?

    Experian is a multi-national credit bureau which also has operations set up in India. Experian is one of the four credit bureaus that operate in India. Experian provides services such as credit behaviour analysis, provision of credit rating as well as services related to detecting potential instances of identity theft and fraud.

  • ✔️What is an Experian Report Number?

    An Experian Report Number (ERN) is a 15-digit numerical code which is unique to every Experian credit information report. It can be found on the top-right corner of every Experian credit information report. It is the reference number that the credit reporter holder must keep in handy at the time of raising a credit report-related query or dispute with an Experian official.

  • ✔️How often is the Experian credit score updated?

    The Experian credit score is updated whenever the bureau receives credit-related information pertaining to an individual from member banks and financial institutions, which typically happens on a monthly basis. However, the date on which each financial institution may share credit information can vary.

  • ✔️How is Experian credit rating different from that of other bureaus?

    The Experian credit rating system generates a credit score of only up to 850, whereas other credit bureaus issue scores within the range of 300-850. Additionally, Experian assigns different kinds of weightages to several aspects of an individual’s credit-related information for the purpose of computing their credit score.

  • ✔️What documents do I need to submit in order to get my Experian credit information report?

    You must provide identity proof (such as a PAN Card) and address proof (such as electricity bill) to get your Experian credit information report.

  • ✔️How to check your Experian credit score for free?

    As you are entitled to check your Experian credit score for free once every year, you can do the same through Experian’s official website itself. All you must do is fill in some basic information, provide the necessary documents, and validate your identity by answering a few questions regarding your credit profile.

  • ✔️Is 870 a good Experian credit score?

    Your Experian credit score can only go as high as 850, while the credit score of other bureaus usually goes as high up as 900. The higher your credit score is, the better. If your credit score is above 750 in general, it is considered to be an excellent credit score. So yes, a credit score of 870 would be excellent in general.

  • ✔️How will the Experian credit score affect my loan applications?

    The higher your Experian credit score, the better are your chances of getting a loan. If your Experian credit score is above 750, you stand a decent chance of getting a loan at favourable interest rates. On the other hand, the lower your credit score, the lower are your chances of getting a loan. If your Experian credit score falls below a certain threshold (say 650), your loan applications are likely to get rejected.

  • ✔️What are the charges of obtaining an Experian credit score online?

    If you have already used up your one free Experian credit score check, you will have to pay a fee of ₹399 in order to get your Experian credit score.