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What is a Credit Score? How to Check, Improve and Calculate Credit Score?

Clix December 20, 2020

 

India is home to around 139 crore people. Among this mass population, few are well versed with the world of finance and loans. With the dedication and collaborative effort of several financial institutions, credit awareness among Indians is on the rise. This really is an achievement, which will work in favor of the country’s financial outlook in the near future. People are now consciously taking steps to ensure they maintain a good credit rating and score.

MUST READ: 7 Common Questions Every Borrower Has in Mind Before Applying for a Personal Loan

How Credit Bureaus Began?

Equifax, Experian and TransUnion are India’s three leading credit bureaus that keep a track of the client’s spending and repayment history. (a client here can be anyone with a credit card, loan or any other credit instrument.)

Equifax began in a Tennessee grocery store in 1898 as Retail Credit and it’s demand rose to newer heights. In 1979, Retail Credit became Equifax from ‘Equitable Factual Information’ and started operations with consumer data.

Experian roughly goes back 200 years when some merchants shared information on people who could not pay back their debts. They began to compile a list of people whose credit scores were good and bad both. This endeavor gave rise to a credit company called TRW, which in 1980s gave rise to Experian and officially came into being in 1996.

TransUnion began in 1969 and its main function was to collect data and maintain self-credit monitors for consumers.

India’s first credit information company (CIC) was formed in August 2000. This organization is commonly known as Credit Information Bureau (India) Limited and is certified by the Reserve Bank of India (RBI), the country’s banking authority.

What is a Credit Score?

A credit score is a number between 300 and 900 that highlights a borrower’s creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, repayment history and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.

How to Check Credit Score Online?

Have you ever considered applying for a loan? One should ensure a good credit score in order to apply for any loan.

Clix Capital has teamed up with Experian to provide you with an excellent way to check your credit score. Just follow the steps mentioned below and you’re all set! Fill out the form present on the website. You’ll need to submit the following details:

    • Gender
    • Full Name
    • Date Of Birth
    • PAN Number
    • Pin Code
    • Email Address
    • Mobile Number
    • Check the box ‘I agree to Clix Capital’s Credit Score Terms of Use’.
    • Click on ‘Get Your Credit Score’ button

It’s really that easy!

How to Improve a Credit Score?

Obtaining a loan requires just a few steps and maintaining a good credit score is one of them. A poor credit score can make it difficult for anyone to apply and avail a loan. Lenders can demand higher interest rates that can be expensive and depressing. Listed below are few steps you can take right now to boost your credit score.

  1. Check Your Credit Report

Before you start thinking about how to increase your credit score, its important to first be aware of your existing score. It’s also advised important to check your credit report on which your credit score is based. Claim a free report from Clix Capital to examine your repayments and credit management. Your credit report contains records about all your credit accounts or enquiries for loans or credit cards made along with your payment history.

  1. Timely Payments

Timely payments of your bills highlight your responsibility to pay your EMIs to your lenders or credit card providers. Your payment record is a pivotal factor that affects your credit score. Late payments, defaults, third-party collections, foreclosures etc., harm your credit score.

  1. Low Credit Utilization Rate

The usage of your credit card against the total credit limit available carries influence as well. When you pay your balances and decrease your utilization ratio, your credit score may improve. Excess use of your card limit has a negative effect on your credit score and highlights your dependence on credit balances.

  1. Avoid Applying for New Accounts too often

When you apply for new credit, a hard inquiry is applied to your credit report. Such an inquiry remains on your credit report for 2 years and might lower your score. Therefore, refrain from applying for multiple credit lines within a short period of time.

  1. Rectify Credit Report Errors

Removal of any errors is another quick way to improving your credit score online. There could be a closed account that might not be updated as closed or pending. Get a .

 

How is a Credit Score calculated?

Your credit score is calculated via credit records, which is sent to the credit bureaus by  financial institutions and banks. The credit bureau considers all the information received and calculates your credit score.

Your credit report also contains the status for every settled and unsettled account. Your past EMI payment details are also recorded along with your EMI defaults and delays on your loan EMI or credit card dues.

The report also takes into account the number of credit applications made. Whenever you apply for a new credit card or loan or any other credit instrument, this application is added under the Inquiry Section in your credit report. A higher credit application tends to give a negative rating to the bureau and tags the person as ‘credit hungry’.

Credit scores range between 300 and 900. The closer you are to 900, the better your chances to secure credit as it indicates responsible credit behaviour. The general credit score range is given below:

Poor: 300-579

Fair: 580-669

Good: 670-739

Very Good: 740-799

Excellent: 800-900

The Bottom Line

Your credit score is what matters when you’re in need of immediate funds. An excellent score can offer lower interest rates, and you’ll pay less for any line of credit with quick approvals and disbursals.

Clix Capital offers you a simple way to check credit score online for free.

For any queries, feel free to write to us at hello@clix.capital or call us on 1800-200-9898.

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