Your CIBIL score represents how reliable you are as a borrower and how well you manage your debt. It also affects the interest rate you pay to your lender and also plays a pivotal role in deciding whether your loan application will be approved or not. If you’re curious to know where you stand, read on to know more.
Super Prime – 781-850
A CIBIL score in the range of 781-850 implies that you have been responsible when it comes to paying credit card bills on time and in full each month. Borrowers with a score of 850 and above have a history of no late payments, as well as low balances on credit cards. You are also the prime candidate to qualify for the lowest interest rates on loans, mortgages and credit lines because of the low risk for defaulting on their credit agreements.
Prime – 661-780
A CIBIL score in this range indicates that you are generally financially responsible when it comes to money management. A figure in this range could signal that credit card balances are relatively low as compared to their credit account limits. However, this score doesn’t exempt you from qualifying for credit, but you may be charged a higher rate of interest on that loan.
Near Prime – 601-660
This score suggests that you may be going through some tough credit times, or at least recovering from recent setbacks. While you may be taking steps to improve CIBIL score, it may take months or years to get back at the top. At this level, you may qualify for a new loan, but it will likely come with a higher rate of interest.
Sub Prime – 300-600
An individual with a score between 300-600 has a significantly damaged credit history. This may be due to the default on payment of loans or credit card bills. A poor CIBIL score may also be the result of a bankruptcy, which will remain on borrower’s credit report for at least 10 years. At this point, you have a less chance of getting new credit. If your score lies in this range, talk to a financial advisor regarding the steps to be taken to repair your credit report.
To help, you can apply for a secured credit card. It is designed for people who can’t qualify for a typical credit card yet. You load the card with your own money and then use it as a credit card – using it for your expenses and then paying off your bill every month. Use it wisely and your CIBIL score could improve sooner than later. Later, you may also become eligible for a traditional credit card.
If you have a CIBIL score below 300, there are chances that you haven’t yet established a CIBIL score or have a credit history. When you get your first loan or credit card, ensure to pay EMIs or credit card bills on time to establish a good credit record. If you have a credit history, and your score has fallen to this range, drastic steps will likely be necessary.
The Bottom Line
Your CIBIL score plays a major role in determining whether you will qualify for credit as well as the terms (including interest rate) of the loan. Paying your bills on time and in full every month will help you prevent damaging your CIBIL score.