What is a Good Credit Score in 2024? | 5paisa (2024)

As we enter 2024, borrowers wonder what credit score unlocks the best loan interest rates and financial opportunities. In India, experts say a score between 750-900 will be rated excellent. Lenders trust high scorers to repay debts responsibly. But for some, a 750+ score remains elusive. With diligent credit management, timely payments, and lower balances, most can build their score gradually. A rewarding, high credit score awaits those focused on long-term responsible borrowing. In the section below, we'll discuss what is a decent credit score.

What Is A Good Credit Score In 2024

In 2024, a credit score between 750 and 900 is generally considered excellent and depicts you as a very low credit-risk borrower. A score between 700 and 749 is still good and shows you have a proven track record of responsibly managing credit. A credit score above 650 is usually adequate to get approved for most loans and credit cards.

However, every lender has their own criteria for loan and credit approval. Some may approve you with a 650+ score, while others may want a higher 700+ score. The higher your credit score, the more your chances of getting approved at lower interest rates.

How is Credit Score Calculated in India?

In India, credit scores range between 300 to 900, with 900 being the highest score. Your credit score is calculated as per your credit report, which contains your credit history and current credit accounts.

The two most famous credit scoring models in India are:

• CIBIL Score: Introduced by Credit Information Bureau (India) Limited, this score ranges between 300-900. A higher CIBIL score indicates lower risk.
• Experian Score: Developed by Experian India, this score ranges between 300-900.

The factors which impact your credit score are:

• Payment history- Track record of bill payments and whether any payments were missed or delayed.
• Credit utilization- The ratio between your current loan/credit amounts to the total available credit limit. Using less than 30% of your total limit is ideal.
• Credit history length- How long have you managed loans and credit accounts? A longer positive history improves the score.
• Credit mix- Having a healthy mix of loans, like home loans, auto loans, credit cards, etc., is better than relying only on one type of borrowing.
• New credit applications- Too many new applications in a short span can reduce your score.

So, in 2024, having a CIBIL/Experian score between 750 and 900 will signify an excellent credit score.

Advantages of Having a Good Credit Score in India

A good credit score of 750+ comes with several advantages:

1. Higher chances of loan and credit card approval
2. Faster loan processing and disbursal
3. Lower interest rates on loans & credit cards
4. Higher credit card and loan limits
5. Lower processing fees
6. No need for credit deposit or guarantor
7. Pre-approved loan offers

Maintaining a high credit score makes you a desirable customer for lenders. You can bargain for better deals and lower rates with most banks and NBFCs.

Offers Available on Good Credit Scores

Banks and financial institutions provide special offers and benefits to customers with excellent credit scores. Here are some common offers extended to those with 750+ scores:

• Lower interest rates - Get lower interest rates on personal loans, home loans, business loans by up to 2%
• Higher credit card limits - Banks offer higher credit limits on new credit cards
• Lower processing fees - Waived off processing fee on loans
• Pre-approved offers - Instant loan approval through pre-approved loan offers
• Balance transfer programs - Lower balance transfer interest rates from another credit card
• Loan top-up - Top up existing loans easily with minimal documents
• Credit card upgrades - Easier upgrades to premium credit cards
• Insurance discounts - Lower premiums on health and life insurance plans

Building and maintaining an excellent credit score has tangible financial benefits. You get access to cheaper credit and better terms from most lenders.

How to Improve Your Credit Score Quickly in 2024

Here are some tips to improve it faster in 2024:

1. Pay all credit card loans EMIs on time, every time. Even a single default can drastically hurt your score.
2. Maintain low credit utilization. Use at most 30% of your total available limit.
3. Only apply for a few new loans or credit cards simultaneously. Space out applications by six months.
4. Avoid loan foreclosures. Instead, prepay loans gradually, if possible.
5. Become an authorized user on someone else’s old credit card account. It builds credit history.
6. Have a good credit mix - auto loan, home loan, credit cards, etc.
7. Don't close unused credit cards. Keep them active with small spending.

Follow these tips consistently. You can see 50-100 points improvement in just 6-12 months. But long-term discipline is key.

Why Building A Credit Score Is A Long Process

Though improving your credit score relatively quickly is possible, building an excellent credit score from scratch takes a few years. Here's why -

• No shortcuts for credit history length - Accounts must remain active for years.
• High usage severely damages score - It takes years to undo the damage of past credit excesses.
• Old negatives stay for years - Defaults, settlements, etc., impact score for many years.
• Opening too many new accounts - Every application causes a hard pull on your credit.
• Missed payments hurt - One or two missed payments negatively impact your score.
• There is not enough credit mix - You need time to build a diverse credit portfolio.
• Low limits - It may require years to get substantial credit limit raises.
• Inaccurate reporting - Resolving reporting errors involves time.

Building a pristine credit score requires diligently managing your credit over many years. There are no quick fixes. Be patient and maintain good credit habits consistently. Focus on low usage and 100% on-time payments.

Conclusion

A credit score of 750 and above is considered excellent in 2024. It makes you eligible for the best loans and credit card offers at the lowest rates. Consistently maintaining low credit utilization and flawless payment history is key. Avoid unnecessary credit applications. Check credit reports annually for errors. Building credit takes time, but the rewards are well worth the effort.

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