Lenders largely rely on credit scores to assess lending risks. Based on available credit scores, the lender will assess your creditworthiness and decide whether or not to approve your loan. As such, an Experian credit score is a good way to get an idea of your credit standing before loan application.
An Experian credit score is assigned by Experian, one of the four credit bureaus in India. It analyses your credit information such as repayment history, age of credit, credit usage levels and more, to arrive at a 3-digit score between 300 and 900.
Read more to understand more about Experian credit scores and how it influences your loan approval.
What Do Different Experian Credit Scores Mean?
Generally, a credit score of 750 and above is considered to be a good score. This encourages lenders to see you as a low-risk candidate and approve your loan application. To help you understand the different scores and what they indicate, here’s a look at the different scores along with their implications below:
- No History
This means that there is no data available on your credit habits. This is because you may never have applied for a credit card or a loan and are likely new to borrowing. Lenders will be unwilling to offer you unsecured credit until you start building a stable credit profile.
- 300 – 500
Anything in this range is a poor credit score. It means that you have a history of payment default, missed EMIs, high credit utilisation, and poor financial management. Lenders will classify you as high risk and will shy away from offering you new credit.
Scores in this range are considered low. It means that you may have had some irregularities such as late credit card bill payments and multiple credit inquiries. Lenders will be cautious when assessing your loan application, as there is a risk of default.
- 650 – 750
An Experian credit score in this range is a good indicator of your disciplined credit behaviour. With timely repayments and balanced credit history, you will be classified as a low-risk borrower. Lenders will offer you credit, but mostly at higher interest rates.
- 750 – 850
Scores in this range are very good credit scores. It indicates that you have a good history of managing debt, over a period of time. You also space out your credit applications, have no payment default history and pay your EMIs on time. Lenders will offer you credit willingly, but you may not always get the best deals.
- 850 – 900
Anything in this range is an exceptional credit score, and it means that you have a perfect credit history. With this, you will qualify for pre-approved loans and free credit card upgrades. Lenders will classify you as very low risk, and you will get the best deals at the best rates.
How to Run a Free Credit Score Check on Experian
To run a free credit score check, you need to start the process on the official website. Here are the steps:
- Go to the official Experian India website
- Click on ‘Free Credit Score’ on the main page
- Wait to get redirected, enter your mobile number, and enter the OTP
- Choose the ‘Free Plan’ and click on ‘Buy Now ’
- Fill the form with your details, such as your name, DOB, gender, email ID, address, and pin code
- Check the box, and click on ‘Get Report’
How Often Are Experian Credit Scores Updated
Lenders registered with Experian are scheduled to provide user credit information to the credit bureau once a month. Different lenders may send the data on different days of the month.
Ideally, your credit score and report are also updated on a monthly basis, as soon as Experian processes the credit data. Since the data is regularly refreshed, an Experian credit score is up-to-date and relevant.
What is the Difference between Experian and Other Credit Scores?
All four credit bureaus in India will provide you with a free credit score once a year. Credit scores provided by different credit bureaus may be slightly different. This is because bureaus use different data samples and techniques to derive their credit scores.
Also, the lenders from which bureaus source their credit data may not be the same. Hence, credit scores provided by each of the credit bureaus have a unique meaning.
Experian Score vs CIBIL Score
Both CIBIL and Experian credit scores have their own advantages. However, CIBIL scores are more widely used in India, with nearly 90% of banks and financial institutions tied up with CIBIL. This is how an Experian credit score compares to a CIBIL score.
|CIBIL Score||Experian Credit Score|
|It is mandatory for you to have a good CIBIL score while applying for loans. This is used by lenders to evaluate your application in order to make a decision.||Although an Experian score is accurate and gives a clear indication of your repayment capabilities, it is not mandated by many lenders.|
|Being India’s first credit bureau, a CIBIL score has a higher weightage in credit applications.||Experian credit scores have significantly low weightage.|
|A good CIBIL score is prioritised in business loan applications. This means that a good CIBIL score has better chances than a high Experian score.||Experian credit scores are not disregarded by lenders. However, CIBIL scores are usually preferred for business loan applications.|
The best way to build a strong credit score is by exercising good financial hygiene. This includes habits such as:
- Timely payment of EMIs
- Never defaulting on payments
- Keeping old credit cards active
- Maintaining a low credit-utilisation-ratio
- Spacing out credit inquiries
- Regularly reviewing your credit reports
While this does not guarantee credit approval, a high credit score indicates to potential lenders that you are capable of handling credit responsibly. Moreover, if your Experian credit score is unfavourable, you can try using the CIBIL score or vice-versa.
In conclusion, an excellent credit score is the key to securing the required financing for your needs. Financial institutions today are enthusiastic to lend. All you need to do is qualify. Start today and build your credit score to fuel your home loan, education loan, and other dreams.