How do I know if I have bad credit?

How do I know if I have bad credit?

The best way to find out where your credit rating sits is to check your credit score. There’s four main credit reporting agencies in India, and under government legislation, you are entitled to one free credit report each year.

In India, there are four well-known Credit Information Companies, which are listed as follows:
  • Experian. …
  • TransUnion CIBIL. …
  • Highmark. …
  • Equifax.

To get your credit report you’ll need to provide your name, date of birth, proof of identity – this is usually your PAN number, and your address.

One you get your credit score, and your credit report, the next step is to find out what it means.

What is a Credit Score?

A credit score is a number usually ranging from 300 to 800 and is calculated based on personal financial data and spending behaviour. The higher the number, the better the credit score. An ideal/excellent credit score is anything from 700 and above. Any number ranging from 679 to 680 is a good score.

So what is a Bad Credit Score?

As a general norm, most lenders will not extend credit to those with a score less than 620. Scores that range from 500 to 579 are considered poor credit scores and scores that range from 300 to 499 are considered bad credit scores.

Below is a table that explains the breakdown of ranges for a bad credit score:

Low credit score 580 to 619
Poor credit score 500 to 579
Bad credit score 300 to 499

Even if credit is not denied to bad score holders, it will be much more expensive with higher interest rates. Insurance schemes and loans will get much pricier.

If your score is good or higher, you are in a better position to secure finance, including car loans, a mortgage, or a business loan.

What Affects My Credit Score?

A bad credit score comes from not paying credit card bills on time, paying less than the monthly installment, not paying loan EMIs on time, bad credit buying pattern, payment history, borrowing history etc. These factors will earn you negative points and jeopardize chances of a good and healthy financial future with access to easy credit at lower interest rates.

How To Gain An Excellent Credit Rating?

To avoid a poor credit rating you should avoid any defaults on your bills and loans, and don’t spend more than you earn.

Getting an excellent credit rating is a little more challenging. People with an excellent credit rating have planned ahead to put their finances in order. They will usually own a home with more than 20% equity and have a middle to high income.

Some steps you can take towards an excellent credit rating include:

  1. Don’t apply for credit too often.
  2. Review terms and conditions of your loan or balance transfer offer to ensure that you meet the eligibility requirements.
  3. If you aren’t sure about where to apply for your loan, consider using a broker who can make a full assessment of your financial profile and match you to the lender with the best available product.
  4. Pay on time. Either set up direct debits, or keep a calendar that you stick to with your payments that fall due. Ensure there’s money in your account for your credit contract bills by setting up a personal spending allowance for yourself each week.
  5. Avoid making purchases that you don’t really need.
  6. Plan for the future. Set a long-term goal to save a first home deposit, pay down your mortgage, or boost your superannuation and investments.
  7. Once you take control of your financial situation, you’ll find that paying bills on time is easier. Finding out your credit score is just the first step in a healthy financial future.


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