What Credit Score Do You Need To Get Approved For A Credit Card?: A credit score, also known as a credit rating, is an evaluated numerical expression that shows how eligible you are to repay your loan or debt. Reserve Bank of India gives license to the companies to operate as credit information companies in India. There are four credit information companies that create your credit reports. “The Credit Information Bureau (India) Limited” (CIBIL) since 2001, and in 2010 three more companies were given licenses that are Equifax, Experian and Highmark.
The credit score ranges from 0 to 999, the higher is the score, the more you are worthy for getting loan or credit from the banks or lenders at the best interest rates. Banks and credit card companies check your credit history and bank statements where they calculate your credit score, which will show them whether it is safe or risky by lending you credit. At certain cases you might not even get credit card if your credit score is too low.
How is credit score calculated?
Whenever you apply for credit, lenders check your financial statements or payment history in order to determine your credit score to find out whether you are worthy enough to get credit from the lender.
Factors used to calculate debtor’s credit score are:
- Debtors Bank Statement
- Debtors Payment History
- How often debtor applies for credit and the types of credit he/she have such as credit cards, student loans etc.
- How much credit debtor still owe.
- Had debtor cleared his/her previous debts on time or not.
Your credit scores may differ with time as well as depending on the company you are applying, as different company have their own method of calculating credit score which may differ from other companies. So you may have different credit score at the same time too. Also companies have different preferences, they will always seek the potential customers so even if you get same score from two different companies You may get refused for credit by one and accepted by another but it gives you an idea that how company sees you.
Through good credit score you can easily gain access to Credit cards, loans, car financing and mortgages.
If you have any negative records such as late payments and default you might not get credit from the lenders as lender firstly want assurance from your side that they will get their payments on time but if your records are cleared and positive you will gain points and have high chance of getting credit.
Various Credit Scores – What’s the difference?
If your credit score lies between 961-999, then you have excellent score for getting least interest rates loans, best credit card and mortgages but as previously explained different company have different preferences so there are no guarantees, but the chances are high.
If your credit score lies between 881-960, then you have good score and will also get credit card, loans and mortgages but you may not get the very best deals.
If your credit score lies between 721-880, then you have fair score and you might not get best deals, interest rates and your credit limits will be low.
If your credit score lies between 561-720, then you have poor score and you might not get best deals as well as interest rates will be higher and you will also have less chances of getting credit as compared to the score higher than 720.
If your credit score lies between between 0-560, then you have very poor score and you would not be accepted by most of the lender and even if you get selected you have to pay highest interest rates.
You can easily know your credit score without any charges, previously they used to charge around 500 but now it is for free on various websites, little information is asked to log in such as your mobile number, PAN card number, Date of Birth etc.