A credit score is designed to measure your risk as a borrower. A healthy credit score is critical to avail loan facilities from the majority of banks and financial institutions. The credit score is used as a parameter by the banks for credit decisioning. A good credit score is generally considered to be 750 and above. A score of 551-620 is considered low, 621-700 is considered fair, 701-759 is considered good, and 760+ is considered excellent.
How Credit Score is determined?
- Financial institutions, being members of credit bureaus, regularly provide the bureaus with the borrower’s credit behaviour, such as credit facilities, its utilisation and repayments, information on repossession, write off, etc.
- Credit bureaus such as CRIF, Experian, CIBIL, and Equifax, use these details to create a credit information report and subsequently determine the credit score for each customer.
The credit score calculation incorporates five major components, with varying levels of importance. These categories with their relative weights are:
- Payment history (35%): The category of payment history takes into account whether you have paid your credit accounts consistently and on time.
- Amount owed (30%): The next largest component is the amount you currently owe relative to the credit you have available.
- Length of credit history (15%): The longer your credit accounts have been open and in good standing, the better. Lenders will view someone who has never been late with a payment in 20 years as a lower risk than someone who has been on time for two years.
- New credit (10%): Also, when people apply for credit frequently, it probably indicates financial pressures, so every time you apply for credit, your score gets dinged a little.
- Credit mix (10%): Lenders like to see a healthy credit mix that shows that you can successfully manage different types of credit. Revolving credit (credit cards) and installment credit (mortgages, auto loans, student loans) should both be represented, if possible.
Also Read: Top credit bureaus in India
More on credit score
- Your record of on-time payments and amount of credit you’ve used are the two top factors.
- Applying for new credit can temporarily lower your score.
- Your credit score is calculated based on information in your credit report.
Understanding what influences your credit score will help you determine how to establish and maintain a healthy credit score. You can develop a strategy for improving your credit score so that you will be more likely to be approved for credit at better rates, which can put you on the road to financial health.
Also Read: How to Increase CIBIL Score from 600 to 750
Bank offers to Improve your Credit Score
Here are some bank offers that can help improve your credit score:
1. ICICI Bank Credit Builder Program
The Credit Builder Program is a programme which lends a helping hand to customers who are interested in improving their credit history and credit score. With the Credit Builder Program, these customers can avail an Insta Platinum Credit Card and subsequently, make timely payments of dues on the card. By making timely payments on the card, customers can improve their credit score over a period of time.
Eligibility criteria
To be eligible for ICICI Bank’s Credit Builder Program (CBP), you must:
- Have a minimum fixed deposit of INR 50,000
- Be willing to clear any existing overdue
- Be looking for a new credit line
- Be interested in improving your credit history and credit score
- Not have a credit score due to lack of any loan or credit card
How does it work?
- The customer needs to clear the existing overdues or pay the amount waived off for a previously settled credit line with the Bank, as the case may be.
- An Insta Platinum Credit Card is issued against a Fixed Deposit of a specified amount.
- Once the customer starts using this Insta Platinum Credit Card regularly and repays the dues on time, the credit history will start improving gradually and consequently, improve the overall Credit Score.
2. Axis Bank Insta Easy Credit Card
The Axis Bank Insta Easy card is suitable for people who want to improve their credit score. It is one of the few cards which comes with the feature of guaranteed approval from the bank. The only criteria for this card is the applicant must have a fixed deposit with Axis Bank. The card is offered against your fixed deposit with the bank. The card offers a wide range of features which include an interest-free period of 50 days, high cash withdrawals along with flexible credit limits. The Insta Easy card offers dining offers along with fuel surcharge waiver and eDGE Loyalty Rewards.
Also Read: 25+ Low Credit Score loan App List
Eligibility Criteria
To be eligible for the Axis Bank Insta Easy Credit Card, you must meet the following criteria:
- Be an Indian or NRI
- Be between the ages of 18 and 70
- Have a fixed deposit with Axis Bank of at least ₹20,000 and up to ₹25 lakh
- Not have a Tax Saver FD, Auto-sweep FD (Flexi-Deposit), or an FD in the name of a trust, company, society, or HUF
How does it work?
The Axis Bank Insta Easy Credit Card is a secured credit card that works by being issued against a fixed deposit (FD) with Axis Bank:
- Eligibility: The applicant must have a fixed deposit with Axis Bank.
- Credit limit: The credit limit is up to 80% of the FD’s principal value.
3. YES Bank – BankBazaar Co-branded Credit Card
The YES Bank – BankBazaar Co-branded Credit Card is suitable for tracking your credit score, building your credit report, and earning rewards. The card is free for life. The card comes with a credit fitness tracker that provides monthly reports and a real-time dashboard to track your credit score. You also have access to insights that will help you in improving your credit score.
The card offers unlimited reward points that never expire. You can earn points for online dining, groceries, apparel, and other retail spends. You can also share your points with friends and family. The card also offers a 1% waiver on fuel transactions between Rs. 400 and Rs. 5,000 and a 15% discount on dining bills at selected restaurants.
Additionally, there is an insurance coverage of Rs 2.5 lakh in case of the accidental death of the primary cardholder. The card holder is also eligible for quick loan.
Also Read About: Cibil/Credit Score
Eligibility Criteria
The eligibility criteria that must be met in order to avail the credit card are mentioned below:
- You must be between the ages of 21 years and 60 years.
- Self-employed individuals and salaried employees can apply.
- The Income Tax Return must be Rs.7.5 lakh or the net salary per month must be at least Rs.25,000.
How does it work?
- You get monthly credit fitness reports with a real-time dashboard to track your credit score. This access will be granted once you complete your first transaction with the YES Bank – BankBazaar Co-branded Credit Card.
- You have access to insights that will help you in improving your credit score.
4. RBL Bank BankBazaar SaveMax Pro Credit card
With the RBL Bank BankBazaar SaveMax Pro Credit card, you can earn reward points and get a credit advisory report. The card is an exclusive credit card that offers a host of benefits. This is an invite-only credit card that increases your savings the more you use it for your day-to-day expenses by offering various rewards.
Every time you spend Rs 100 on your SaveMax Card, you will earn 1 reward point. The card gives 2.5% effective reward on grocery, 1.25% on fuel and 0.5% on all other spending. The rewards on grocery and fuel are capped at 1,000 points a month (about ₹250) and the cashback on Zomato and BookMyShow is capped at ₹100.
Also Read: Check CIBIL Score by pan card
Eligibility Criteria
To apply for the RBL Bank-BankBazaar SaveMax Credit Card, you should have:
- Good credit score
- Stable source of income
How it works
Begin your savings journey with 5000 reward points on making the first transaction within 30 days of issuance of the card and on paying the first year annual fee.
