New Delhi. You need a loan to buy a car, but whether the bank will give you a loan or not depends largely on your credit score. It is also called CIBIL score in common parlance. It is a three-digit number, between 300 and 900. This number is your credit history. For example, whether you have taken a loan before or not. If you have taken it, then you have repaid it on time or not. Even if you have just made an inquiry for a loan, its record also gets captured in these numbers.

How is the credit score determined

The credit score is calculated by the country's major credit bureaus. RBI has given license to four credit information companies for this - Credit Information Bureau (India) Limited (CIBIL), CRIF Highmark, Experian, and Equifax. Among these, CIBIL is so famous that people have started calling the credit score as CIBIL score. These companies evaluate your credit score, which reveals your financial health.

Whether you want to get a credit card or a loan of lakhs for a house or car, a credit score is always required. If your credit score is good, you will get a loan on easy terms. You may also get some concession in the interest rate and the loan repayment period. But, if the credit score is bad, the bank may refuse to give a loan. Even if they give a loan, it will be with strict terms and higher interest rates.

Why does the credit score go down?

There can be many reasons for a low credit score. Such as missing a loan installment, delay in credit card payment, closing the old credit card. If you make several inquiries for a credit card or loan in a short interval of time, then also your credit score can decrease. To keep the credit score better, the credit card bill and other EMIs should be paid on time.

How good is the credit score

A score of 650 to 749 is considered good. It can get you a loan at normal interest rates. A credit score of 750 to 799 is quite good. People with this score can get loans at attractive interest rates. A credit score of 800 to 900 is considered excellent. You can get as much concession in the loan as possible according to your credit score.

Credit score should not be less than this

The credit score starts from 300 points. If your score is up to 549, it means that your record of repaying loans is very poor. It is almost impossible for you to get a loan from a reputed financial institution. A credit score of 550 to 649 is considered average. You can get a loan on this credit score, but the interest rate may be high.

Impact of a bad credit score

• You will have difficulty in taking a new loan.
• More interest will have to be paid.
• Pre-approved loan offers will decrease.
• The loan application may be rejected.
• If you get a loan, it will be with strict conditions.