Is 700 a Good Credit Score for Loan?

A credit score measures an individual's creditworthiness. It gives lenders like banks and non-banking finance companies a snapshot of your financial status. Lenders take a look at your credit score and decide whether you have the potential to repay the credit card debt or the borrowed loan amount. A credit score ranges between 300-900. The closer your credit score is to 900, better the chances of getting a loan or a credit card with better benefits and interest rate. At present, several lenders offer preferential pricing to consumers with a high credit score. Most of the lenders consider a credit score of 750 and above as ideal and there is a good chance that you might get a loan. In order to see whether the credit score of 700 is enough for getting a loan approval, you should first know about the different ranges of a credit score.

Credit Score Range

• NA/NH: If you have no credit history or you do not have enough credit history to be scored. This indicates that you are a new entrant to the credit system.
• 350 – 550: This is a poor credit score and suggests that you have not paid bills on time. The chances of getting a loan or a credit card are very rare.
• 550 – 650: If you have a score in this range, it indicates that you have tried to be regular with your payments. However, it is still not the best score to get an instant approval on your loan applications.
• 650 – 750: This is an acceptable range of credit score among lenders. With a score falling in this range, you can get a loan or a credit card. However, you may not still be in the position to negotiate with the lenders and get the best deal for your credit. Also, if you have a CIBIL score in this range, you should continue to pay off all the bills on time and boost the CIBIL score even further.
• 750 – 900: With a CIBIL score in this range, you will easily get the best deal for a loan or a credit card. A high credit score suggests you are a disciplined borrower and have been using the credit responsibly. Banks will offer you special pricing for your credit as a result of such a high credit score. Also, you can take advantage of your high credit score and negotiate for a credit card with better benefits.

So, a credit score in the range of 650-750 gives you a good chance of getting an approval on your loan application. However, it must be noted that along with your credit score, the lenders will look at your credit report in detail and check your credit history. You should also understand that credit scores are not fixed and they change depending on your credit usage. It is not difficult to improve your credit score. By following a certain payment discipline and controlling your credit usage, you can increase your credit score. Make sure to pay all the bills on time and avoid any kind of delays. Also, you should not close your old accounts as you will lose out on the credit history and this will bring down your score. In order to improve your credit score, you should also maintain a low credit utilisation ratio. Your credit exposure should be only 20-30% of your credit card limit. A high credit utilisation hampers your credit score. Finally, you should limit your credit inquiries and also not make all of them at the same time. It is advised to spread your credit inquiries over a period of time as too many of them will trigger hard inquiries from lenders that will have a negative effect on your credit score.

There are several benefits of having a high credit score. First up, with a healthy credit score you are in a position to bargain and get the best deal on the rate of interest. Banks offer preferential pricing to individuals with a high credit score. Customers with a high credit score can also request an increase in credit limit. In fact, banks will go ahead and offer you an increase in credit limit. It must be noted that you need to have patience as it takes time to improve your credit score as it cannot happen overnight.