Now both of them looking to buy a flat and in the market for home loan.

Samir also took personal loan from XYZ Bank, but due to some personal issues, he defaulted in EMIs payment.

Raj has taken a car loan from XYZ Bank and has been paying his EMIs in a timely manner. Two friends, Raj and Samir, working in a MNC and drawing a handsome salary. To check how likely their future customer is to repay a loan on time. All of these categories are taken into account in your overall score – no one area or incident determines your score. These categories, with weight in brackets, are payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%) and type of credit used (10%). However (as per investopedia), what is known is that the calculation is broken into five major categories with varying levels of importance. Nobody (other than CIBIL TransUnion) knows the mathematical formula behind the calculation of credit score. In terms of interest rates, on average, a person with a credit score of 520 will get interest rates on loans that are three to four percentage points higher than rates given to a person with a score of 720. The resulting number is a highly accurate prediction of how likely you are to repay your loan/credit.Īs per CIBIL, most credit scores range from 300 to 900, with the majority of people in the 600 to 800 range.Īs per CIBIL, to get the most favourable interest rates, you’ll need a score of 720 or higher. A credit score is a three-digit number that is used to predict how likely you are is to repay a loan/credit on time.

Credit Report contains your credit score and history of repaying loans or credit.Ī credit score is a number generated by a mathematical formula – based on information in the credit report.

Transunion credit score ranges