credit score as a yardstick of your creditworthiness or the likelihood that you will repay borrowed money on time. Credit scores are usually generated based on information in your credit report, which includes credit account details, payment history, current debts, and the overall financial behaviour. Excellent score: High CIBIL scores in the range of 800 and above suggest that there is no risk to lenders.
So, the borrowers with excellent credit scores are expected to qualify for the best interest rates and terms on loans and credit cards. Good Credit: The range between 670 to 799 shows a relatively low risk to lenders. Borrowers with good credit scores typically qualify for favourable terms, although not always the best available.
Fair Credit: Scores in the range of 580 to 669 suggest a moderate risk to lenders. Borrowers who have fair credit scores may still qualify for loans and credit cards, but they may face higher interest rates and less favourable terms. ALSO READ: How you can negotiate lower interest rates with a good credit score? Poor Credit: Scores less than 580 indicate a high risk to lenders.
So, borrowers with poor credit scores may have difficulty qualifying for loans and credit cards, and if they do, they will likely face high interest rates and less favourable terms. Lenders use credit scores along with other factors, such as income and employment history before they decide whether to give credit and if yes, then at what terms. While credit scores are important, they are not the sole consideration, and different lenders may have their own criteria and thresholds of risk.
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