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What are the Various Ranges of Credit Scores?
A credit score is a number used by banks and other lending institutions to ascertain a person’s “creditworthiness.” This number is calculated by credit information bureaus and is usually between 300-900. It depicts the individual’s ability to repay borrowed credit, like loans.
In India, there are four licensed credit bureaus that prepare credit scores – TransUnion CIBIL, Experian, CRIF High Mark, and Equifax.
What are the Credit Score Ranges?
Different credit bureaus might use different scoring models. But, in general, it is accepted that a credit score above 700-750 is generally considered good, while one below 650 is considered to be either fair or bad.
The common credit score ranges are as follows:
| Credit Score | Range | Meaning |
| NA/NH | “Not Applicable” or “No History” | You have not used a credit card, and/or never taken a loan. Thus, you do not have a credit history. |
| 300-549 | Poor | You might have numerous missed payments or defaults on credit card bills or EMIs, or poor credit utilisation, or a high number of credit enquiries, You will be considered a high risk by lenders of defaulting on your loans, Lenders might not approve your loans or credit applications. |
| 550-649 | Fair | You may have some irregular or late payment of credit card bills/EMIs or multiple credit inquiries, You might be considered a risk for lenders, Many lenders may not approve your loans; those who do will likely have higher interest rates and down payments |
| 650-749 | Good | You have a history of good repayment behaviour in the past, You will be considered a lower risk of defaulting, Most lenders may approve your credit, but you might not get the best rates |
| 750-799 | Very Good | You have regular credit payments, a long credit history, responsible repayment behaviour, You will be considered a low risk for lenders, Lenders will likely be approved for credit, and get good deals on loans. |
| 800-900 | Excellent | You have displayed excellent financial management, regular credit payments, low credit utilisation, and exemplary credit history, You will be considered a very low risk for lenders, Banks and lending institutions will give you the best rates and favourable terms on loans and credit cards. |
What is Considered a Good Credit Score?
In general, it is accepted that a credit score above 700-750 is generally considered good. Since the highest possible score is 900, the best credit score range is around 750-900.
It is also good to remember that every lending institution has their own method of risk grading. For example, one bank may consider a score above 700 to be good, while another bank may prefer a score above 750. Thus, in general, a score that is above 750-800 should be considered good in most situations.
What is a Bad Credit Score?
A credit score below 650 is considered to be either fair or bad. Those who fall into this low range are said to have “subprime” credit scores, and lenders will classify them as people who might have a hard time repaying a loan.
Bad scores can result in difficulty obtaining loans, your credit applications being denied, and even if you do get approved you might face higher interest rates.
The good news is that a bad credit score is not fixed. Once you know what is keeping your score low, you can do a number of things to improve your credit score over time. This includes reviewing your credit report regularly, paying your bills on time, keeping your credit utilization, and limiting any new credit requests.
Why is it Important to have a Good Credit Score?
Banks and other lending institutions use your credit score to decide whether or not they will approve your requests for loans and other credit. Thus, if you have a higher credit score, it shows that you have demonstrated responsible credit behaviour in the past, and this may give potential lenders more confidence in approving credit requests.
You can also avail yourself of other benefits, such as lower interest rates, better terms of repayment, and a quicker loan approval process.
Frequently Asked Questions
Can you have no credit score?
If you have never used a credit card, or you have never taken out a loan, you will not have a credit history. This is because most credit scoring models use information from credit cards and loans to determine your score. Thus, if this information is not there, they can't generate a score.
Why does the credit score not start from 0?
When the credit scoring system was first created in the US, they set the lowest possible score at 300 so that they could use the 100–300 range for other scoring models, and users would know which was which without getting them confused. Additionally, they also used the 0–99 range for special codes, so they could not be used.
However, some people do have a credit score of 0, Nil, or NA. This just means that there is no information about the borrower's credit history.
Will you start out with a credit score of 300?
Even if you are just starting your credit journey, or have just got your first credit card, it is unlikely that your credit score will be as low as 300, unless you start off with high debt and poor credit habits. However, as you have yet to build your credit history, it will still be fairly low.
What factors affect your credit score the most?
Credit scores are calculated by an algorithm that uses a number of factors. Each of them has a different weightage on your credit score as follows:
- Payment history (35%) – Paying your credit bills on time improves your score, while delayed, missed, or defaulted payments will lower it.
- Credit utilization (30%) – How much of your credit limit you use; if it is higher than 30% it can lower your score.
- Length of credit history (15%) – Older accounts and credit cards display consistently responsible credit behaviour.
- New credit inquiries (10%) – Numerous requests for credit, especially during a short period of time, can lower your score.
- Credit mix (10%) – It is recommended to have a mix of both unsecured loans and secured loans.
Are credit scores the same across the world?
Many countries around the world may use similar credit scoring systems. However, while some credit bureaus (like Equifax or Experian) operate in multiple countries, international laws prevent sharing credit histories with overseas lenders. This is done to prevent identity theft and fraud.
But remember that if you plan to move abroad and open a credit card with a local bank or apply for a loan, the foreign banks and lending institutions may still inquire about your credit history and any outstanding debts in your home country.
Why is your credit score different at different credit bureaus?
The four RBI-licensed credit bureaus (TransUnion CIBIL, Experian, CRIF High Mark, and Equifax) use slightly different scoring models while calculating credit scores. Thus, your scores may vary based on which credit bureau furnishes your credit report.