Any loan is an important fiscal aid in times of need, and they come in handy for solving a variety of purposes, especially when it comes to buying a new home and a new car. But before you go onto get a loan sanctioned, have you ever considered checking your credit score? You should seriously do that, because the entire future of your loan depends on your credit score. You must wonder what could your credit score could be. Well, your credit score is nothing more than a three digits approximation of your entire credit history, conveniently measured and updated to reflect your credit worthiness. It is on the basis of your credit score that banks and financial institutions would sanction or reject your loan application. Therefore, if you are going to get a loan, be sure to be certain about the strength of your credit score.

The average Indian is probably unaware of what a credit score could mean. If the loan application is rejected on the account of a poor credit score then the question must be asked as to why the credit score was so low. A number of factors actually go into preparing the credit score of a person, and most importantly it includes a person’s entire history of credit transactions (including credit card usage and loan applications) and the manner in which each credit issue has been handled. Your credit score can be used to gain a lot of benefits and services. Thus, it is essential that you routinely update yourself on your credit score, for doing so has a number of advantages it has to offer:

  • You can assess and determine the probability of you getting the loan
  • You can improve your credit score in due course of time
  • You can detect and edit credit inputs in time
  • You can ascertain whether your identity is being stolen or not
  • You can avoid needless hard enquiry
  • You can know the interest rate and offers available to your credit score

Usually, your credit score is usually created and regulated by CIBIL in order to objectively render your credit worthiness, and the lower and upper limits of the credit score scales are fixed at, respectively, 300 and 900 points. The upper limit signifies that you have handled your credit responsibilities pretty well in the past, whilst the lower level indicates that you have failed at taking responsibilities for handling credit. Generally, lenders approve loan applications of applicants, whose credit scores are 750 or higher. It must be understood, however, that creditors don’t necessarily just consider the credit score of the applicant; other equally considerations like the type of product (secured or unsecured), loan tenure and amount of the loan in deciding both the interest rate and whether to sanction the loan or not.

If you wish to keep yourself updated with your latest credit score, you can request your updated credit report from the following agencies, viz, TransUnion, CIBIL, Eqwuifax, Experian or CRIF Highmark.

Understanding Credit Scores: Good, Fair and Bad


Generally, there is no official or methodological gradation of credit scores into classified slabs that determine the credit worthiness of a person, but it so happens that a system of approximation exists whereby the person’s credit standing has been classified along to the following slabs, according to custom:

  • Above 800: Excellent
  • Between 750 and 800: Good
  • Between 700 and 650: Fair
  • Between 650 and 700: Poor

Based on this gradation, if your credit score is low, you have many ways to increase it. Some of the methods have been discussed below:

Improve your credit score is not as hard as it actually sounds to be. In fact, it involves the self-discipline on financial and credit issues and having the necessary knowledge and foresight to understand the correlation between fiscal manoeuvring and its effect on credit scores. There are a lot of ways to improve your credit score but they tend to be more or less protracted in nature, and the nature of taking a loan might not be compatible with patiently waiting for your credit score to become better.

Thus, in this case, what can be done may not actually increase your credit standing. But these definitely help to solve short-term contingencies, and give you enough breathing space to prepare yourself to improve your credit score. Some of these techniques might include applying for Non-banking Financial Corporations (NBFCs), whose loans are more flexible and with credit scores. You can also borrow from friends and family to meet extra, short-term contingencies and pay off your immediate debts.

Hence, these are some of the things you can do if your loan gets rejected, so the next toime you apply for a loan the lender would have no other choice but to sanction it.