The credit score is a three-digit number that shows your ability to manage credit responsibly and repay debts on time. Whether you are planning to apply for a loan, a credit card, or any other financial product, your credit score can be the deciding factor between a quick “approved” and a frustrating “denied”.
In simple terms, a good credit score helps secure better financial terms, lower interest rates, and quicker approvals. However, not everyone has the same credit score, and the range that defines good depends on the lender and the scoring model.
But how do you know if your score is “good enough”? And what does it take to get there?
Keep reading to understand what is a good credit score, why it is important, and what you can do to build and maintain one.
A credit score reflects your financial behaviour and creditworthiness. This score helps banks, financial institutions, and lenders evaluate the risk of lending money. Credit score ranges are usually divided into categories that indicate different levels of credit health, helping both lenders and borrowers understand where they stand.
In India, credit scores usually range between 300 and 900, with higher scores representing better creditworthiness.
Understanding these ranges allows you to assess your financial health and make improvements if needed. You must regularly monitor your credit score and maintain healthy financial habits, such as making timely payments and having low credit utilization, which can help you move to a better range over time.
By knowing your credit score range, you can plan your finances effectively and secure better credit opportunities. To help you understand which is the good range of credit scores, we have divided the ranges and described what each range means.
| Credit Score | Credit Health | Description |
| 300 – 579 | Poor | This credit range signifies having major credit challenges. Borrowers in this category often struggle with obtaining loans or credit cards. |
| 580 – 669 | Fair | A fair credit score range indicates moderate risk. While borrowers in this range may qualify for credit, they are often subject to higher interest rates and limited options due to previous credit issues. |
| 670 – 739 | Good | A good credit score range shows responsible financial behaviour. Borrowers here are likely to qualify for various credit products, including loans and credit cards, at reasonable interest rates. |
| 740 – 799 | Very Good | Scores in this range reflect strong credit management. Lenders view individuals with very good credit as low-risk, offering them loans with competitive terms and favourable interest rates. |
| 800 – 900 | Excellent | The highest credit score range shows excellent creditworthiness. Borrowers in this category enjoy the best loan offers, low-interest rates, and financial trust from lenders. |
Understanding these ranges can help you identify areas to improve and work toward better financial opportunities. By maintaining responsible credit habits, you can move closer to the “Excellent” category and enjoy the benefits of a good credit score range.
Benefits of Having a Good Credit Score
A good credit score is not just about borrowing, it reflects responsible financial habits that lead to long-term benefits. Building and maintaining a high score requires discipline, but the rewards are well worth the effort.
While we have already discussed why having a good credit score number is important, let’s look at some common benefits it brings along.
1. Access to Loans with Lower Interest Rates
A good credit score range allows you to secure loans at competitive interest rates. Lenders consider applicants with a high credit score as low-risk and offer them better loan terms. Even a small reduction in interest rates can help save a significant amount over the loan’s tenure.
2. Faster Loan and Credit Card Approvals
Maintaining and building a good credit score can help you get faster approvals on loans which can be especially advantageous during financial emergencies.
3. Higher Credit Limits
You can secure higher credit limits if you have a good credit score, as it provides proof of your ability to manage credit responsibly.
4. Better Negotiation Power
Whether it is lower interest rates, reduced processing fees or loan terms, you can negotiate for better terms with a high credit score.
5. Pre-Approved Loan Offers
Good credit scores can help you receive pre-approved loan offers from banks and financial institutions. These loans come with easy processes and can be a quick solution for immediate financial requirements.
6. Easier Visa Processing
Certain countries assess your financial stability as a part of their visa application process. A good credit score enhances your credibility, improving your chances of visa approval.
7. Future Financial Opportunities
From securing larger loan amounts to accessing premium financial products, a good score ensures you’re prepared for future financial goals.
8. Longer Loan Tenures
Lenders are more likely to approve long-term loans if you have an excellent credit score. This makes managing monthly finances easier by reducing the burden of high EMIs.
Tips for Maintaining a Good Credit Score
You must have a healthy credit score to stay financially stable and gain access to favorable loan terms. Here are some effective strategies to maintain a good credit score range:
1. Monitor Your Credit Utilization Ratio
Your credit utilization ratio is the percentage of the credit you use against the total credit limit available. You must aim to keep this ratio below 30% to maintain a healthy score.
2. Avoid Cancelling Old Credit Cards
Older credit cards contribute to a longer credit history, which positively impacts your credit score. Even if you don’t use an old card regularly, keep it active and ensure timely bill payments. A consistent history of repayments will help you maintain a good credit score.
3. Check Eligibility Before Applying for Loans
Applying for loans without verifying the eligibility criteria can follow loan rejections, which may lower your credit score. You must always assess your eligibility before submitting an application to avoid unnecessary hard inquiries and maintain your score.
4. Review Your Credit Report Regularly
Errors in your credit report, such as unrecorded loan closures, can negatively impact your score. Regularly reviewing your report helps you identify and correct discrepancies promptly, maintaining your creditworthiness.
5. Avoid Multiple Loans Simultaneously
Applying for several loans at once can portray financial stability. It is better to prioritize your needs and take one loan at a time. This measured approach helps maintain your credit score and defines you as a responsible borrower.
6. Pay Bills and EMIs on Time
Late payments can lower your credit score. To avoid missing a deadline, you can set up automatic payments or reminders. Making timely payments reflects positively on your financial behavior.
7. Maintain a Diverse Credit Mix
You must have a balanced credit portfolio that includes credit cards, secured loans (e.g. home loans), and unsecured loans (e.g. personal loans) to showcase responsible credit management. A healthy mix can improve your credit score over time.
8. Avoid Frequent Credit Applications
Requesting multiple credit applications within a short time frame can temporarily affect your score. You must ensure to only apply for credit when necessary to avoid appearing over-reliant on borrowing.
9. Keep Old Accounts Open
Closing old accounts reduces the average age of your credit history, which can negatively impact your score. You must keep the old accounts open and active to maintain a longer credit history.
10. Monitor Co-signed Loans
If you’ve co-signed a loan, ensure the primary borrower makes timely payments. Any delays or defaults will affect your credit score as well, so stay informed about the loan’s status.
11. Use Credit Responsibly
If you are planning to use credit for the first time, start with one credit product like a credit card or small loan. Use it wisely, ensuring timely payments to build a positive credit history.
Conclusion
A good credit score in India ranges between 750 and 900. Maintaining a high credit score not only helps you secure loans easily but also ensures availing favorable terms, including lower interest rates and higher loan amounts. By practicing financial discipline, such as paying your EMIs on time, monitoring your credit utilization ratio, and avoiding unnecessary credit inquiries, you can achieve and maintain a strong credit profile.
Looking for quick and convenient personal loans? LoanTap offers personal loans of up to ₹10 lakhs, ensuring a hassle-free experience with minimal documentation and fast approvals. LoanTap requires a minimum credit score of 700, making it easy for you to secure funds for your goals, be it a dream vacation, a medical emergency, or any financial need.
Frequently Asked Questions
Which factors affect my credit score?
Your credit score is majorly influenced by factors such as payment history, credit utilization ratio, credit age, credit mix, and the number of hard inquiries on your profile.
Does checking my credit score affect it?
No, checking your own credit score (soft inquiry) does not impact your score. However, frequent hard inquiries by lenders can lower it.
What is the difference between CIBIL score and credit score?
CIBIL score, a type of credit score, is provided by the credit bureau CIBIL. Whereas, the credit score is a broader term that includes scores from all credit bureaus like Experian, Equifax, and CRIF High Mark.
Can I get a credit card with a low credit score?
It might be challenging, but some banks offer secured credit cards against a fixed deposit for individuals with low credit scores.
What is the ideal number of credit accounts to maintain a good credit score?
There is no fixed number, but maintaining a mix of 3-5 credit accounts (such as loans and credit cards) and responsibly managing them can help build a strong credit score.
How much credit score is good in India?
A credit score of 750 and above is defined as good in India. It increases your chances of getting loan approvals or credit cards with benficial terms and interest rates. Scores between 700 and 750 are decent, while scores below 650 may require significant improvement to access better financial opportunities.
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