Experian Credit Score: How to Check, Benefits & Importance
Experian is a multinational credit reporting company that started in India in 2010. It is one of four credit bureaus licensed in the country by the Reserve Bank of India (RBI). It provides clients with both personal and business credit scores to help them measure their creditworthiness, and to help manage their credit activities in a more efficient and effective manner.
What is an Experian Credit Score?
Experian credit scores are a three-digit number ranging between 300 and 850. They are calculated by the credit information company using an individual’s history of repaying bills, credit usage, loan applications and more.
A person’s credit score represents their “creditworthiness,” or their eligibility to get an approval for credit cards and loans. Having a high Experian score can improve your chances of getting these approvals, as well as other benefits, because you will be seen as someone with responsible credit behaviour who is at a low risk of defaulting on payments.
What is a Good Experian Credit Score?
As mentioned above, an Experian credit score ranges from 300-850. Here, 300 is the lowest possible score, and 850 is the highest. Generally, a higher score indicates that a person has a more financially sound position.
Here are the ranges or categories of an Experian score:
You do not have a credit history.
Poor history of financial management, payment defaults and poor credit utilization, You will be considered a high risk and lenders will be wary of extending credit.
Some instances of payment defaults, unsecured loans, etc, You will be considered a risk to lenders, as you might be liable to default.
A balanced credit history, demonstrating financially sound decisions, and timely repayments, You will be considered a low-risk borrower, and lenders will extend credit.
Good history of financial management, utilization of credit, and regular repayment with no defaults, You have proven your creditworthiness, and lenders will consider you a low risk when it comes to extending credit.
This is the highest range given by Experian, and indicates an individual with a nearly perfect credit record, You will be considered very low risk, and will also likely get better deals on loans and credit cards.
What is the Importance of having a Good Experian Credit Score?
A person’s Experian credit score reflects what is known as their “creditworthiness”. This is just a reference to their ability to repay a borrowed credit such as a loan.
These scores are important as they are used by financial institutions like banks and other lenders to decide on whether they will approve applications for a loan or credit card, and to avoid situations of bad debt or fraud.
A good/high credit score can help get such applications approved, while a bad/low credit score can contribute to your loan and credit card applications getting rejected.
How is Experian Credit Score Calculated?
An individual’s Experian credit score, and their credit report, is calculated based on five major factors. Each of these factors will contribute to a different percentage of your final score. They are as follows:
What Affects These Factors?
Regular payments on your credit accounts, like credit card bills, loans, and EMIs can help your score, Missed payments or defaulting could hurt your score.
The amount of money you owe, your account balances, and how much of your credit limit that you use are all factors
Length of credit history
The average age of your credit accounts is considered here, Older accounts and credit cards can reassure lenders that you have a responsible credit history.
This refers to the types of accounts or credit you have, Having a good mix of unsecured loans (ex. credit cards and personal loans) and secured loans (ex. car loans or home loans) is recommended, as it shows you can manage both types.
This refers to whether you have recently applied for new credit (like loans or credit cards) or recently opened new accounts, A higher number of enquiries can bring your score down.
How to Check your Experian Credit Score?
Checking your credit score is important, as you will know exactly where you stand. This is especially important in case you are considering applying for a loan or any type of credit, as you can be better prepared.
As mandated by the RBI, consumers can get one free credit report every 12 months, and for additional reports you can pay a fee of ₹399. However, you can check their credit score at any time. Here is how you can do so:
Checking your Experian credit score online
- Step 1: Visit the Experian website and click on the “Free Credit Report” button
- Step 2: Enter your details to log in, such as your name, mobile number, and email address.
- Step 3: You will receive an OTP to the mobile number shared above. Once it has been entered, you can click on the “Get Credit Report” option
- Step 4: Once you have logged in, you will be asked to verify your identity using your date of birth, residential address, and any government approved ID card number (PAN card, passport, driving license, voter ID, etc.)
- Step 5: Once this information is verified, you may be asked some further questions about your loans and credit history.
- Step 6: After this has been completed, you will be redirected to a page where your credit score will be generated.
- Step 7: You will also be able to download your credit report.
Checking your Experian credit score and report offline
- Step 1: Visit the Experian website and download and the Credit Report form
- Step 2: Fill in the details required in the form, and do not forget to sign it
- Step 3: Add a self-attested photocopy of your identity proof documents, such as your PAN card, passport and your voter ID.
- Step 4: Also add a self-attested photocopy of your address proof documents, such as your telephone bill, electricity bill, rent agreement, bank account statement and a deed of purchase.
- Step 5: Pay the required fee of ₹138 for your Experian CIR through either NEFT or enclose a demand draft.
- Step 6: Finally, send the form along with the required documents and payment proof to the following address by post or courier:
- Experian Credit Information Company India Pvt. Ltd. Consumer Services Equinox Business Park, Tower 3, 5th Floor, East Wing, LBS Marg, Kurla (West), Mumbai 400070.
- Step 7: You will receive your credit score and credit report in the mail
Can you improve your Experian credit score?
You can see from the points above that it is important to have a good credit score. Luckily, it is fairly easy to improve your Experian credit score by taking a few necessary steps as follows:
- Pay your bills on time, as even one or two missed payments can negatively affect your score.
- Keep your credit utilization ratio (i.e. how much of your available credit you’re using) low.
- Maintain a good mix of credit to show that you are able to handle new credit responsibly.
- Keep old accounts and credit cards open, as a long credit history can reassure lenders that you have displayed responsible behaviour.
- Only apply for new credit accounts when necessary
- Check your credit report regularly to make sure they don’t contain any inaccuracies that can potentially hurt your score.