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Your credit score plays an important role in the financial aspect of your life. It acts as a deciding factor when you are planning to either apply for a loan or get a credit card. Lenders like banks and non-banking finance companies (NBFCs) consider your credit report and credit score, before sanctioning your loan or credit card application. Your credit score helps lenders determine your creditworthiness and measure your ability to repay the borrowed sum.
A credit score is a measure of your creditworthiness which is presented in a numerical format. It ranges between 300-900, 300 being the lowest and 900 being the highest. You should always work towards maintaining a credit score closer to 900.The majority of banks and NBFCs consider a credit score of 750 and above as ideal. Let's take a look at different credit score ranges:
Bad | 300-500 |
Average | 550-650 |
Good | 650-750 |
Excellent | 750-900 |
A credit score in the range of 300-550 is considered as bad. If you have a credit score that falls in this range, you will need to take serious measures to improve it. Having a bad credit score will not make you eligible to avail a loan or get a credit card.
There are several factors that can hamper your credit score and decrease your chances of getting a loan or credit card. Let?s take a look at some of the main factors that can bring your credit score down:
A credit score is an important factor that lenders consider while granting loans. A bad credit score not only makes availing a loan difficult, but has other disadvantages as well. Read on to learn more about other drawbacks of a poor credit score:
There are several measures that will help you improve your credit score:
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The majority of lenders like banks and non-banking finance companies consider a credit score of 750 and above ideal.
Here are some of the ways in which you can improve credit score immediately:
A number of lenders offer preferential pricing to consumers who have a high credit score. With a high credit score you not only become eligible to receive a loan but also get discounts on interest rates, processing fees, and so on.
Hard enquiries are those that lenders make when you apply for a new credit card or loan. Soft enquiries, also known as credit report checks, are performed by people to check or track their own credit behaviour.
No, soft enquiries will not impact your credit score. However, having too many hard enquiries can lower your credit score because they could reflect more dependency on credit and an increased burden of future repayments.
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Credit Score:
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