A good credit score typically ranges from 650 to 749. It indicates responsible credit behaviour, making it easier to get loans and credit cards at competitive interest rates. Scores above 750 are considered excellent, offering the best terms and lower interest rates.
What Is a Good Credit Score?
Credit scores play a crucial role in your financial life. They often determine the level of trust a financial institution places in you. If you're wondering, “What is a good credit score?” or “How can I increase my credit score?”, this guide breaks it all down in simple terms
Understanding Credit Scores
A credit score is a 3-digit figure that shows your creditworthiness. It’s calculated by credit bureaus using data from your credit report. In India, credit scores typically range between 300 and 900. The higher the score, the better your credit standing.
Lenders, banks, and financial institutions refer to this score to determine the risk of lending to you. So, maintaining a good score can open doors to better financial opportunities.
What Is a Good Credit Score?
In India, a credit score range is usually classified into four main segments:
| Credit Score | Category | Creditworthiness |
|---|---|---|
| 300 – 549 | Poor | High risk – likely to be rejected |
| 550 – 649 | Fair | Limited approval chances |
| 650 – 749 | Good | Generally accepted by lenders |
| 750 – 900 | Excellent | Strong credit history and low risk |
So, what is a good credit score? A score of 750 or above is generally considered good to excellent in India. It shows that you have a reliable credit repayment history and are financially responsible.
What Is a Great Credit Score?
While a score above 650 is considered good, a score of 750 and above is often regarded as excellent or outstanding. This score range significantly improves your chances of securing:
Key features of secured credit card.
- High-value loans
- Lower interest rates
- Premium credit cards
- Pre-approved financial products
In other words, having a great credit score puts you in a very favourable position with lenders.
Why Is a Good Credit Score Important?
A good credit score comes with several financial benefits:
1. Easier Loan Approvals
Banks and NBFCs prefer borrowers with strong credit profiles. If your score is 750 or higher, chances are your loan application will be approved quickly.
2. Lower Interest Rates
Lenders often offer lower interest rates to individuals with good credit scores because they are considered low-risk.
3. Higher Credit Limits
A strong credit history can lead to higher limits on credit cards and loans.
4. Faster Credit Processing
A good credit profile means fewer verifications, resulting in faster loan processing.
5. Better Negotiation Power
You may have more flexibility to negotiate loan terms or credit card benefits.
How to Check Credit Score Online?
Knowing where you stand is the first step in improving your score. Fortunately, you can check your credit score online easily and for free.
Here’s how:
- Visit the official websites of credit bureaus such as CRIF.
- Navigate to the personal credit score section.
- Enter your name, date of birth, PAN, email ID, and mobile number.
- Once verified, your credit report and score will be displayed.
Make it a habit to check your score regularly to monitor your progress and spot any discrepancies early.
What Factors Affect a Good Credit Score?
Your credit score is calculated based on several key components:
1. Payment History
Timely repayment of loans and credit card dues is a major contributor to your score.
2. Credit Utilisation Ratio
Using more than 30% of your credit limit regularly can negatively impact your score.
3. Credit History Length
The longer your credit history, the better it is for your score.
4. Credit Mix
Having a healthy mix of secured (home loan, car loan) and unsecured (credit card, personal loan) credit is beneficial.
5. New Credit Inquiries
Too many loan or card applications in a short period can bring your score down due to multiple hard inquiries.
Tips to Increase Credit Score
If your credit score isn’t where you want it to be, don’t worry. There are several ways to build a good credit history and boost your score:
- Pay Your EMIs and Credit Card Bills on Time: Set reminders or use auto-pay.
- Limit Your Credit Card Usage: Try to stay below 30% of your credit limit.
- Avoid Unnecessary Loans: Only apply when absolutely necessary.
- Monitor Your Credit Report: Spot and dispute errors immediately.
- Maintain Old Credit Accounts: Longer credit histories generally help improve scores.
- Don’t Close All Credit Cards: Having active credit, used responsibly, improves your credit profile.
- Diversify Credit Mix: A healthy mix of credit types—credit cards, personal loans, auto loans—shows lenders you can manage different forms of credit. But borrow only when needed.
- Monitor Your Credit Report Regularly: Check your credit report for errors or fraud. You can access it for free once a year from bureaus like CRIF.
Conclusion
A good credit score (750 or higher) opens doors to higher credit limits, lower interest rates, and better loan terms. To improve your score, pay bills on time, manage credit usage, and regularly monitor your credit report. Build and maintain a strong credit score to secure favourable financial opportunities.
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