One of the most important terms while taking any type of a loan has to be “Credit Score”. This three digit number practically defines your credit worthiness to a Bank/NBFC. On the basis of this credit score, your loan application can be reviewed, terms can be updated/downgraded or even rejected.
What’s the minimum and maximum credit score?
A credit score ranges from 300-900 with 300 being the lowest and 900 being the highest. This score can keep increasing or decreasing on the basis of how you deal with all kinds of banking transactions.
How can I check my credit score?
There are many credit rating agencies that can offer this service to you. This score can help you understand where you stand in the market. There are various levels in credit score. These are;
Poor – 300 to 500:
A poor credit score is when you have missed or delayed a lot of payments. This results in your credit score falling with each delay. Banks and NBFCs will reject your application OR might offer you loans at very high interest rates.
Average – 501 to 700:
An average credit score is a decent score which can be improved with timely repayments of bills and loan EMI’s. Banks and NBFCs will offer you loans and credit cards but not at very good terms.
Good – 701 to 800
A good credit score shows the Banks and NBFCs about how financially responsible of a person you are. Here, the person might have delayed or missed few payments but apart from that they are clean and can be deemed as trustworthy. You can surely get your loan approved but at higher interest rates.
Excellent – 801 and above
This range is the best of the lot. Any score above 800 is seen as the most credit worthy person in the eyes of the lender. Here the person has hardly missed on any bill/EMI payment. These people will always get their loan applications approved easily and will also get better terms and conditions along with lower interest rates.
What kind of credit score is good enough to buy a car?
Being in the “Good” and “Excellent” category surely increases your chances to get your used car loan or new car loan application accepted. Maintaining your credit score by making timely bill payments and loan EMI’s will help you in the long run. Better the credit score, better will be the conditions and terms offered by the Banks and NBFCs. You can also negotiate for a lower used car loan interest rate.
Hence always look on improving your credit score. This will help your future financial life get better.