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What is a credit score?

A credit score is a three-digit number that lies between 300- 900 and shows the borrower's creditworthiness and repayment capacity. Basically, the credit score is a reflection of your reliability as a borrower and your ability to repay your debts and loans.

Having a good credit score can help you get rid of most of your financial problems. The higher your credit score is, the higher chance you have to qualify for a loan. With a better credit score, you will also have a better chance of getting a larger loan amount and low-interest rates.

What are the Features of a Credit score?

  1. It is a three-digit number ranging from 300 to 900.
  2. It shows the creditworthiness of a borrower.
  3. The credit score depends on the credit history.
  4. A score of more than 750 is called a good credit score.
  5. A score of less than 650 can be suspected and needs extra effort to get a loan.
  6. Credit scoring considers these factors to calculate your credit: your repayments history, types of loans you have taken, your total debts, and your credit history length.
Range of Credit Score

How does a credit score work?

The credit score has a significant impact on your finances, as this is often the first thing a lender considers when evaluating your loan application. If your score is low, your loan might get rejected, or the lender may not reject your loan, but they will charge you a high-interest rate.

However, when your credit score is high, the chances of your loan application being approved are greater. Due to a high credit score, you might also get an advantage to get a better interest rate. Hence you may have to pay less on the interest in the long run.

You must also know that your credit score is not the only factor that is considered by the lenders when determining whether or not you will qualify for new credit or loan. In addition to debt-to-income ratios, employment history, and profession, lenders consider these factors before approving/rejecting your application.

What is an Experian credit score?

Experian Credit Scores is the score that can be calculated based on your previous or existing loan or credit card repayment history. In order to process your loan application, banks and financial institutions can make enquiries about it.

What is the Experian Range?

The Experian score varies between 300 and 850. In India, an Experian score of 800 and above is considered excellent. Banks and non-bank financial companies are more confident that you will repay a loan if you have a higher Experian score. A typically good Experian credit score ranges between 600 and 750.

Experian score are also used by lenders such as NBFCs and banks to assess your creditworthiness. Hence having a good Experian score means a low down payment and low-interest rates.

Hence it is suggestible to maintain your Experian credit score by paying all your bills on time and not making several inquiries. You must also keep checking your Experian credit score and report online to know your credit position.

What are the benefits of having a good credit score?

The following benefits are only available to individuals who maintain a clean and consistent payment history and have a high credit score.

  • You will receive a loan at Low-interest rates.

    Having an excellent credit score can be very advantageous for you. It can make you qualify for loans that have a low-interest rate. Hence it can make it easier to repay the debt without any difficulty. You should pay attention to this because even a half percent increase in the interest rate can impact your finances.

  • You can get instant approval for a credit card and loan.

    If you have a high credit score, it can demonstrate to the lenders your creditworthiness, which leads them to give you instant loan approval. Hence, borrowers that have excellent credit scores can benefit from the rapid acceptance of loans and credit cards. This is very important if you have any emergency and need a fund immediately.

    Furthermore, lenders, banks, and financial institutions reject the borrowers with poor credit ratings because of their unreliable credit histories. It's also important to keep in mind that various additional factors will also be considered when you apply for a loan or purchase a credit card.

  • You can have better negotiations power with the lender

    An excellent credit score gives you the power to negotiate on the lower interest rates or on a more considerable loan amount from the lenders. Thus, a good credit score can enhance the bargaining power of borrowers. Apart from all this, it can even entitle the borrower to get unique discounts, deals, and offers.

  • You have a good chance of getting a high limit on the loans.

    An individual's credit score and income are used by lending institutions and banks to determine how much he or she can borrow. Banking and financial institutions are more likely to give you a good loan if your credit score is high. Your high credit score makes you an excellent borrower. However, when the borrower has a low credit score and requests a loan. The loan might be accepted, but the lender will charge higher interest rates.

  • You can quickly get a higher limit on your credit card.

    Lending institutions and banks use an individual's credit score and income to determine how much they can borrow. You can get the best interest rates, rewards, deals, discounts, and cashback offers from these cards. Make sure you pay off your credit cards and loans on time when you are thinking of purchasing something extraordinary with many perks.

  • You can get the chance of getting a long tenure.

    A good credit score can lead you to a higher chance of getting a longer tenure on your loan. A longer tenure lowers your monthly Emis, which can help you maintain your finances properly.

  • You can get access to utility affordability.

    Sometimes credit reports and scores are checked by the utility companies to determine whether you can pay your bills on time or not. In such a case, you will need to put down a security deposit if your credit score is poor.

    You should also remember that the better your credit score, the more chances you'll have to avail of maximum benefits. Hence, if you plan to apply for a loan or a credit card, regularly keep an eye on your credit score. You can check your free credit score at Buddy score to obtain your current credit position.

Credit Score: What factors can impact It?

When you apply for a personal loan , home loan or any credit product, the credit bureaus calculate your credit score by considering various factors. These factors depict your credit behaviour in the past and are reported to banks and NBFCs. Even having high balances on your credit card can significantly reduce your credit score.

Some of the critical factors that can hurt your credit score are:

Your loan Repayment History

If you make timely payments, it can enhance the growth of your credit score and help improve it significantly. If you default on your EMI or make late payments, your credit score is negatively affected. Hence, you must know that your loan repayment history can significantly impact your credit score reports.

The Duration of your Credit History

Your credit history's age can also impact your credit score. If you use your credit cards for a longer duration and keep paying your payments on time, then the lender and financial institutions can determine that you have disciplined credit behaviour. Hence the period of your credit history can have a minimum impact on your credit score.

The number of Hard Inquiries conducted.

Every time when you apply for a new loan or a credit card, your credit rating is checked by the lender. All such inquiries made by lenders and financial institutions are known as hard inquiries. In other words, too many hard inquiries can adversely affect your credit score and give the impression that you are credit-hungry. However, hard inquiries can have a significant impact on your credit score for a short time.

Your ratio of the credit utilization

The credit utilization rate is known as your credit utilization ratio. It is revolving credit used divided by total credit available. You can use it to determine how much credit you have available at the moment. To maintain a good credit utilization ratio, you should not use more than 30% of your available credit.

If you utilize your credit up to 60-70%, it might barely affect your credit score. However, if your credit utilization ratio is high or if you frequently max out your credit limit. The lender may view you as highly reliant on credit and likely have a high repayment burden. This can negatively impact your credit score.

If you have a Mix of credit

Suppose you have taken different loans and paid them off responsibly, such as a personal, auto, or home loan. It will represent you as a responsible person to the lender as you can adequately handle different kinds of credit.

On the other hand, if you have taken out too many unsecured loans, like personal loans, it might also indicate that you are credit hungry and overly reliant on credit. Hence due to this your credit rating might suffer. It's also important to know that the credit mix has little impact on your credit score, and a lender is unlikely to reject you if you don't have an optimal combination of credit products.

If you keep increasing your credit card limit frequently.

If you keep requesting a raise in your credit card limit, it can create doubts about your creditworthiness. It can show that your debt appetite exceeds your ability to pay back. As a result, it might negatively affect your credit score. Therefore, it's best to stay within the existing credit limit and repay debts promptly. If the bank believes it's the right time, they will raise your credit limit.

Other Factors

Apart from the above five factors, which are primary in calculating your credit score, other factors mentioned below can also have a meagre negative impact on your credit score.

  • Your credit history is shortened when you close old credit cards. So it can harm your credit score.
  • If you make multiple credit card or loan applications within a short period, your credit score will plunge. Hence, it is advisable to limit the number of applications.
  • In the event of late payment of credit card bills, creditors charge off the account. One of the worst incidents that can affect your credit score is to have your account charged off.
  • When you have only one credit account, it will negatively impact your credit score. As a result, you should maintain a mix of debts such as loans and credit cards while making consistent payments on time.
  • Your credit score can suffer if you fail to check your credit report occasionally and fix any errors. Creating credit reports is also an endeavour that is prone to error by credit reporting bureaus. Hence, if you do not keep track of your credit report, it could cost you a fortune in the future.
  • When you file for bankruptcy, you can negatively impact your credit score.
  • You can lose your credit score when you request to close a credit card with an outstanding balance. You would be in a similar situation if you maxed out your credit card.

How can you improve your credit score?

Here are some steps you can take to improve your credit score:

  • You must always pay your invoices, credit card bills, and loan EMIs on time.
  • You must never put off paying your bills.
  • You should maintain a clean, rigorous, and error-free credit history.
  • Don't make an excessive number of credit queries.
  • It would be best to keep a healthy balance of secured and unsecured debt.
  • Maintain good credit utilization ratio consumption.
  • You can even apply for a loan from Buddy Loan to increase your credit score.
  • You should watch the fraud, review your credit report thoroughly, and report any unauthorized activity to your bank immediately to correct your score.

What is a Buddy Score?

The Buddy Score was launched by Buddy Loan on February 28, 2022. Where you can check and monitor your credit scores. From Buddy Score, you can receive regular updates and other aspects of your credit report such as loan activity, credit card information, your loan eligibility, and all the reliable insights.

Hence, you must check your free credit score online at Buddy Score, if you want to monitor and maintain it.

How to check your credit score from the Buddy score?

If you want your loan application to get approved, keep a regular check on your credit score before applying for any loan.

To get your credit score from Buddy Score, here are the steps you need to follow:

First, you need to go on the Buddy Loan page, then you have to click on the link 'Check free Credit Score.' after that, you then have to fill out the following information:

  • First name
  • Last name
  • Email Id
  • Pan card
  • Date of birth
  • Gender
  • Residential Pin Code
  • Your Mobile Number
  • When you have filled out all the details correctly, you will receive an OTP. After you enter the OTP, click on "check your credit score." After that, the Buddy score will display your credit score for free in seconds.

    Faqs

    You can check your credit score free from Buddy Score to know your credit position. It will display your credit score online in just a few seconds and with no hassle.  

    No, it won't affect your credit score. If you check your Experian free credit score online, then it is referred to as a soft inquiry, and these inquiries do not impact your credit score. However, if a financial institution makes a hard inquiry to check your credit score, then there may be a fall in your credit point.

    Yes, it is safe for using your credit score. Keeping your sensitive information secure is of the utmost importance for Buddy Loan. You can rest assured that your information will not be shared with third parties.

    Yes, Buddy Score allows you to access your credit score for free, there are no hidden fees or charges.

    A personal loan can impact your credit score in both positive and negative ways. An instant personal loan does not have a negative impact on your credit score on its own. However, if your score is negatively affected in the short term, you might have trouble obtaining additional credit.

    Keeping a close eye on your credit score is very important. In this way, you can determine whether you're a good candidate for a line of credit or not. Another reason you should track your score is to know if any error occurs during the calculation of your score, which will enable you to make timely corrections.

    Your credit score is based on your payment history, repayment records, and other credit information found in your credit report. To measure your creditworthiness as a borrower, lenders use your score before they approve your loan request.

    Following these tips will help you maintain your credit score:

    • You should never have too many active credit cards and loans simultaneously.
    • Always try to pay all your credit card bills on time.
    • Keep your credit utilization under 30% of your credit limit.
    • Be consistent and punctual with your EMI repayments.
    • Check your online credit score, report regularly, and notify credit bureaus about any mistakes.

    No, they are not the same. CIBIL is one of the four major Indian credit bureaus. Credit bureaus record your credit information and calculate your score with their algorithms. A CIBIL report is the most accurate and reliable of these scores. Therefore, the terms credit score and CIBIL score can be used interchangeably.

    Many factors can affect your credit score. Here is the list of the few factors that can affect your credit score:

    • If you take a high number of unsecured loans
    • If you fill several loan applications
    • If you take out too many credit cards
    • If you want to Increase your credit limit

    For calculating an individual's credit score, a few factors are taken into account. It can be calculated mainly by the information that's stored in your reports, such as your credit cards and loans, along with the public records about tax liens and bankruptcy.

    Yes, credit reports are used to calculate your credit score since they contain your overall banking history. Every credit reporting agency, Mark High, Experian, and Equifax offer free copies of your credit report once a year. You can also request copies of all your credit reports simultaneously.

    It is helpful to have a solid credit history when applying for a loan. A solid credit history shows the effectiveness of your repayment abilities. A person who has never used a credit card or borrowed a mortgage does not have a credit history. A lender may also not extend a loan or issue a credit card to someone with no credit history.

    However, you can build credit without credit by considering the following methods:

    1. You can obtain a secured credit card.
    2. Ensure that payments are made on time
    3. Be careful when you use your credit card
    4. Do not apply for multiple bank loans at the same time
    5. Keep an eye on your credit report and score regularly.

    Yes, credit reports are used to calculate your credit score since they contain your overall banking history. Every credit reporting agency, Mark High, Experian, and Equifax offer free copies of your credit report once a year. You can also request copies of all your credit reports simultaneously.

    1. Save time with a quick turnaround period of your application status.
    2. Transparent & 0 complexity in loan process
    3. Personal loan availability on weekends.
    4. Flexible repayment options with loan tenures between 6 months – 5 years.

    Yes, your credit report is accessible for you, lenders, financial institutions and government regulatory agencies.

    To get an Experian free credit report, you will need to complete the Credit Report Application Form and send it to Experian. Thereafter, once your application is received and validated, you will then receive your Experian credit report.