How to Attain a Good Equifax Credit Score

Credit is much more easily accessible than it was 10 years ago. With lenders offering different types of finance, you are spoilt for choice. However, getting approval on credit is not as easy. This is because lenders evaluate certain factors to approve loan requests, and one among them is credit score.
While a low credit score limits your borrowing options, a high credit score opens many doors. It makes you eligible for pre-approved loans, personal loans at lower rates, increased credit card limits, and more. With a good Equifax credit score, you can easily qualify for all your financing needs.

Read on to understand the meaning of a good Equifax credit score and find out how to build one.

What is an Equifax Credit Score?
Credit Information Companies (CICs) in India uses your credit history to assign a score between 300 and 900. Equifax is one such credit bureau that helps in determining your creditworthiness.

The score assigned to an individual is known as the Equifax Credit Score and it is used for determining credit behaviour, when you apply for new credit.

This is known as an Equifax Credit Score and it is used by lenders to determine your credit behaviour when you apply for a new loan or card.

What is a Good Equifax Credit Score?
An Equifax credit score of above 750 gives you a better chance of loan or credit card approval. However, this is considered the best score range, and you can still find lenders offering loans at different scores, for slightly different terms. This is what different Equifax credit scores mean for your loan applications:

• No History
This means you have never even applied for a credit card and there is no data available on your credit history. You are unlikely to get a loan other than small amounts at unfavourable rates.

• 300 – 579/Poor
A score in this range means that you may have previously missed EMIs or defaulted on credit card bills. You may be classified as high risk and may find it difficult to get any more credit.

• 580 – 669/Fair
A score in this range means that you may have had a few slips in the past, such as late repayments and multiple credit inquiries. Lenders willing to offer you credit may do so at higher rates.

• 670 – 739/Good
A score in this range means that you may be building a strong credit profile with steady usage and timely repayment. Lenders may be willing to offer you loans after evaluating other factors such as your income levels and employment status.

• 740 – 799/Very Good
A score in this range means that you may be practising healthy credit habits such as regular EMI payments and controlled credit inquiries. Most lenders will approve your loan application, but you may not get the best deals.

• 800 – 900/Excellent
A score in this range means that you have maintained a high score through financial discipline. You pay your EMIs before time and have low debt-to-income levels. You are an ideal applicant and can negotiate for the best rates and offers.

How to Build a Good Equifax Credit Score?
A number of factors influence your Equifax credit score. To maintain a good score, ensure that you pay attention to the following:

• Repayment and EMIs
Any delay or default in repayment, such as paying your credit card bill late, or missing a personal loan EMI will lower your credit score. So, try to create a schedule for timely and regular payments, and stick to it.

• Credit History
Lenders like to see that you have been able to handle credit responsibly over a period of time. Having a long credit history showing good credit behaviour will positively impact your credit score. Try not to close old credit cards to benefit from this.

• Credit Mix
A good mix of unsecured and secured loans is necessary to qualify as a low-risk borrower. Keep this in mind before deciding which loan to apply for. For example, you can get an unsecured personal loan to meet your home renovation expenses but you can also avail of a secured home loan for the same.

• Credit Utilisation Ratio
This is simply the ratio of credit you use within the credit available to you. If this ratio is more than 30%, it means that you may be relying too much on credit to finance your needs. This will lower your score.

• New Credit Enquiries
Everytime you apply for a new credit card or a demand loan, it temporarily lowers your credit score. Avoid too many credit inquiries to maintain a stable score.

Equifax Score vs CIBIL Score
Credit scores from both Equifax and CIBIL are valid in India. Each credit bureau uses a unique algorithm and slightly different data to calculate their scores. Because of this, different credit scores may have slight variances. Both bureaus let you check your credit score once a year for free, or multiple times in a year, for a fee.

The main difference between the two is the credit bureau that assigns the score. Moreover, both scores have a similar range, and the scores have similar implications. However, the CIBIL score may have a higher weightage, and may be assessed by most lenders in India.

This is only because TransUnion CIBIL is one of oldest rating agencies, and most lenders rely on the CIBIL score for an accurate assessment of an applicant’s credit standing. So, if you are applying with a lender that has a CIBIL score criterion, chances are that your Equifax score may not cut it.

However, it is important to check this score before you apply, as it indicates your creditworthiness. If you are wondering how to check CIBIL score, the answer is simple. All you have to do is visit the CIBIL portal at https://www.cibil.com/freecibilscore at click on the ‘Get Your Free CIBIL Score’ tab. This way, you can access your CIBIL score easily.

Usually, you use loans to buy something special or to address emergencies. It may cost more than you can afford to pay in a single instalment. A high credit score is imperative to be able to avail of these loans on your terms, and address your financial needs as they arise.

A high credit score is not just important to those seeking credit. It can also help you get better insurance options or even present you as an attractive candidate for prospective employment. Hence, draw up your financial plan and start building your credit score today!