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What is Experian, CIBIL score, and How Can You Work to Improve It?

As per customer priorities – the Indian credit users, the credit card industry in India is expected to evolve at a CAGR of more than 25 percent during 2020-25. Note that the expected growth is due to the enhanced demand for credit cards as well as the trend of purchasing products initially and making their payments later.

In 2019, there were more than 52 million users of credit cards in India. With the swift growth of credit cards, banks today are expanding their outreach to semi-urban and urban markets to enhance their market share.

The above-given numbers basically highlight the importance of credit cards and their quick growth in the market of India. With increasing importance and credit card use, the importance of the Experian CIBIL score has even increased, which has made it crucial to analyze, discuss and achieve a good CIBIL score. This can be done by conducting regular score checks through CIBIL check online sites or other digital platforms.

CIBIL score states the user’s creditworthiness and impacts the lender’s decision, financial institution and banks in general concerning whether they should reject or approve the credit application of the user. Additionally, a user with a strong credit score can enjoy great perks like credit card linked discounts and deals, offers, access to gift vouchers etc.

Here, we will highlight the importance of Experian CIBIL score for credit cards, its advantages and explain if you can obtain a credit card with a score below 750.

What is meant by a strong Experian CIBIL score for a credit card?

Experian CIBIL score can range anywhere from 300 to 900. The score by both the credit bureaus, namely CIBIL and Experian, is computed by analyzing various parameters like the user’s past repayment behaviour, the balance between unsecured and secured credit, credit utilization ratio utilization, number of settled or delayed payments, hard inquiries in a specific time-period etc.

The table below reveals distinct credit score ranges as well as their implication.

CIBIL score Meaning
300-550 Poor credit score

Highlight irregular repayments

Massive credit dependency

Payment defaulter

550-650 Fair credit score

Too many hard inquiries

Casual behaviour towards repayment

650-749 Satisfactory credit score

Zero error credit history

Responsible repayment history

Fewer chances to turn into a defaulter

Entitled for loans and credit card

High rate of interest

750-900 Strong credit score

Responsible repayment behaviour

Zero repayment default

Higher negotiation capabilities

No outstanding balance

Nil chances of turning into a defaulter

 What are the crucial benefits of having a strong credit score for a credit card?

A strong credit score provides different benefits to loan or credit card applicants. A few of the crucial benefits include are:

       Credit users become eligible for high-end credit cards and other linked offers.

       Creditors tend to offer a higher credit limit to those with a strong credit score.

       Creditors charge a rate of interest on the loan amount for applicants having a strong credit score.

       Applicants having impressive credit scores avail earlier approval for their loan or credit card application.

       An applicant having a strong credit score is provided higher priority than an individual with a lower credit score.

Credit card for an individual with a low credit score

With more than 52 million credit card users in India, the defaulters’ number is automatically enhanced. However, what should you do if you hold a low credit score? Let us understand. A poor credit score is nothing but an indication of the user’s credit repayment habit and casual attitude towards acquired credit. Owing to this, financial institutions usually refrain from providing loans or credit cards to applicants having low credit scores. However, there are various instances, such as loss of employment, medical exigencies, financial damage etc., that block users’ fund flow, impacting the credit score negatively. Thus, for these exceptional reasons, you may opt for a secured credit card.

A secured credit card is one of those cards offered against your fixed deposit. Any applicant can simply acquire a secured credit card without the requirement of any income proof. As such credit cards are provided against FD, the late payments or delays are recovered from such deposits only. Thus, the various risks linked with non-repayment of credit amount to the extent nullified through secured cards.

Here are ways to increase your credit score.

CIBIL rating holds a crucial part of your credit history. CIBIL score, if below 750, can come across as a curse for the ones looking for an urgent personal loan. However, this credit score is only a number, which can be improved. All you require doing is focusing on the below-listed factors for loan approval.

Set reminders to pay your dues on time

Missing the repayments of your outstanding dues is a massive mistake because it can poorly impact your score. You require being punctual when it is about repaying your EMIs. If your EMIs are delayed, you do not just pay penalties, but your score also drops massively. If you are one of those individuals in India who are not good at remembering the dates, ensure to set reminders to timely repay your dues.

Check out errors in your report.

In your head, you may have a strong credit history, but there can be different unknown errors that may be pulling your cibil score down. Let us say if you have repaid your loan entirely and have closed it from your end, but it is still coming up as a current due owing to administrative issues. Similarly, you will require checking other suspicious activities and errors and resolve them as soon as possible to see an instant increment in your credit score.

Maintain a good credit mix

It is highly recommended to have a balanced credit mix of unsecured loans such as personal loans, credit cards and secured credit options like home loans, car loans etc. An individual having a higher secured loan proportion is also given higher preference by the bureau or lenders when approving their credit application. In case you hold a higher unsecured loan proportion than the secured one, try to prepay your unsecured loan as soon as possible to maintain a balanced mix. 

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