Credit score in India is a crucial parameter that helps determine your creditworthiness. It is a numerical representation of your past credit behaviour that includes timely debt repayments, sincere financing, good use of credit cards and more. When you apply for a quick loan, the lender checks your credit score for making all the crucial loan decisions. They may even reject your loan application if your credit score do not satisfy their loan eligibility requirements. Thus, when you plan to apply for an instant cash loan, you must first know about your credit scores.
Various credit bureaus or CICs assign these scores to individuals and businesses based on the record collected related to their credit behaviour. In India, four credit bureaus primarily provide these scores, Equifax being one of them.
Although the TransUnion CIBIL score is most widely used for assessing individual and business profiles when making a loan application, the score issued by Equifax is equally reliable.
Read on to know all crucial details related to the credit bureau below.
Equifax – Leading Credit Information Company (CIC) in India
Equifax, or Equifax Credit Information Services Private Limited, abbreviated ECIS, is a licensed credit bureau in India operating under the Reserve Bank of India regulations. Venturing into the world of credit history collection and score issuance, Equifax started back in the year 2010. The company operates in joint venture with Equifax Inc. USA along with several top-rated financial institutions in India. The credit score issued by Equifax is looked up to by various lending institutions as a credit performance benchmark of the borrower’s profile when issuing advances like quick loans.
The credit score issued by the CIC varies in the range of 300 and 850. The lowest credit performance is issued a score of 300 and the highest goes up to 850 as per the summarised history of the borrower. The bureau also issues a Credit Information Report that carries a detailed summary of the borrower’s credit history.
Meaning of Various Equifax Credit Score Ranges
Below given is a breakdown of what various credit score ranges issued by Equifax mean for the borrower.
- NH – The NH or ‘No History’ mark for an individual indicates that they do not carry have any prior credit history as they have not availed any loan or advance.
- From 300 to 549 – A score in this range is considered poor and indicates lags and defaults in repayment. It also indicates a high-risk borrowing profile.
- From 550 to 649 – Individuals with irregularities in repayments or partial repayments are assigned scores within this range. A score in this range is considered fair. A low to medium risk profile, it may lead to approval but interest rates may be high. In the case of unsecured advances like instant cash loans and quick loans, the score range may not be sufficient.
- From 650 to 749 – This Equifax score range is considered good for the purpose of borrowing and indicates responsible credit behaviour. The range may still keep you from some best loan terms that lenders offer.
- From 750 to 850 – This score range is considered excellent and indicates an impressive credit history. The risk related to borrowers in this range is the lowest and provides the best leverage for negotiation on loan terms.
Factors That Contribute to Equifax Credit Score Calculation
The major aspects that contribute to the calculation of an Equifax credit score include the following.
- Length of credit history: The total duration for which you have had your credit history maintained contributes significantly to the score determination. A long and clean period of credit history creation with minimal delays or defaults is considered the best.
- History of repayments: You must make timely and full repayments of your credit liabilities as they arrived, like EMIs towards your quick loan or any loan repayments, credit card bills, etc.
- Total credit utilisation percentage: The total percentage of credit utilised as against the total availability in a month impacts the score too, which should ideally be fewer than 30%.
- Total credit mix availed: Your credit portfolio must also hold a balanced mix of secured and unsecured advances for balanced risk distribution.
- Number of credit enquiries in a given period: The total number of enquiries made in a short duration impacts the score as well, with higher enquiries impacting it negatively and vice versa.
When going for a quick loan application, or any loan for that matter, you can go for an instant check of your Equifax score. The bureau allows access to the score for free once to all users, beyond which any enquiries made would be chargeable at a nominal rate. It is ideal to check your credit score with any of the four credit bureaus before sending your loan application and work on your borrowing profile, if needed, for its improvement.