Are You Above Average?
India has always been a savings driven economy. In India CIBIL maintains the credit history of everyone’s of loans and credit cards through member banks and financial institutions. It allots their credit scores to customers based on this information. These scores, further, help the lending institutions to decide whether person asking for loan is worthy of giving loan or extending credit.
India’s overall creditworthiness has been assessed by many credit rating agencies such as Moody’s and S&P in a macro sense. However CIBIL takes it right down to each individual citizen, and in general it assessed that Indians are stable enough when it comes to their credibility in managing finances and credit. It rates India at BBB-. While we don’t have an exact number, based on an intelligent interpretation of available data, we conclude that he average credit score in India lies somewhere between 640-690. In general 750 is considered the benchmark of a quality score that will qualify you for most loans, and in general people who reach 700+ tend to maintain a more stable CIBIL score over time.
To keep a consistent credit score, you must keep in mind how to improve it. Picture yourself as how a banker might see you and take steps to keep the score up. Following some of these techniques will keep your score well above “average”:
- Time taken to repay the instalments should be focused on, one should not be dilly-dally in paying off their dues, this hurts your score
- Frequency of cheque bounces should be reduced to NEVER
- Settlement reasons should be taken care of, like if it is a car loan, or home loan, it has a much bigger impact compared to credit card settlement
- Spend only that amount that you feel can repay within stipulated time. In other words, Be CreditSmart.
- Keep your oldest credit accounts always. Sometimes we grow out of a credit card or not really use it anymore because we’ve found a better card – but they should be terminated and left behind. The oldest card has the most reliable credit history as it has a trail of all your credits that might help you in future.
- You should use your credit card more often, but paying big portions of it off each month. This will help you in improving your credit card utilisation ratio, which weighs around 30% of your CIBIL score.
- If your CIBIL score is not good enough to have a credit card then go for a secured credit card. Banks like ICICI Bank, Citibank, SBI etc. offer secured credit against fixed deposit of nominal account
There are many ways to improve CIBIL score, but in context of India average credit scores have been decent enough. But you want to be above average, that’s why you’re here. You must be keen on improving your score even if you are above 700, the sky is the limit.