What is the average credit score in India and how to improve your credit score
28 February, 2025 | 15:53 IST
The concept of credit score has gained significant importance in India’s financial landscape with the rising adoption of credit instruments across categories. Whether you’re looking to take a loan or apply for a credit card, your credit score plays a crucial role. This score – which ranges from 300 to 900 – is a three-digit number that reflects your creditworthiness based on your credit history. Higher scores indicate better credit health. Credit score is determined by factors such as repayment history, credit utilisation, length of credit history, types of credit and recent credit inquiries.
Understanding the factors that can affect your credit score can help you maintain a strong credit report and improve your financial prospects.
In India, credit scores can be categorised into several ranges, each reflecting different levels of creditworthiness:
750 to 900: This credit score is regarded as exceptional. Those in this range are likely to receive credit facilities with lower interest rates and higher chances of loan approval.
700 to 749: This range indicates a good credit score. While it reflects a reliable credit history, it may not be as strong as an excellent score.
650 to 699: Scores in this range are viewed as fair. Although you may still receive credit offers, they often come with higher interest rates.
600 to 649: A score here is deemed poor. Individuals may struggle to obtain credit and may face higher interest rates even if they do secure a loan or credit card.
Below 600: Immediate action is required as lenders may consider profiles in this range to be risky.
According to a TransUnion CIBIL report, consumers who actively monitor their credit tend to have an average credit score of 729, while those who do not monitor have an average score of 712. Furthermore, 46% of individuals who engage in self-monitoring saw improvements in their scores within six months, compared to 41% of those who did not.
According to a Paisabazaar credit insights report published in November 2023, the credit health of consumers across the country shows varied trends. The study analysed data from 3.7 crore consumers across 823 cities, highlighting gaps between salaried and self-employed individuals as well as differences among various age groups.
Salaried vs self-employed
Over 25% of salaried consumers have an excellent credit score of 770 and above.
Only 14% of self-employed consumers boast a strong credit profile.
Both segments show that 32% of consumers fall into the good credit score category.
Urban vs non-metro
24% of consumers in major metro cities possess a strong credit score.
22% of non-metro consumers also have a strong credit score, indicating similar credit behaviour across these demographics.
Cities with healthy credit scores
The study highlighted the cities with the highest ratios of credit-healthy consumers:
Bengaluru
Ahmedabad
Mumbai
Pune
Chennai
Delhi
Hyderabad
Surat (Non-metro)
Coimbatore (Non-metro)
These findings show that both metro and non-metro cities have notable credit health, with some non-metro cities performing well.
A strong credit score can unlock numerous financial benefits, making it easier to secure loans and credit cards while enjoying favourable terms.
A strong credit score improves your chances of securing loans and credit cards, as it shows responsible financial behaviour and minimises the risk of default for lenders.
Those with high credit scores often benefit from lower interest rates on loans, making their monthly repayments more affordable and manageable.
A strong credit score can qualify you for pre-approved loans and credit card offers, enabling faster access to funds when you need them.
Lenders are more likely to offer premium credit cards with enhanced rewards and benefits to those with strong credit scores, elevating your purchasing power.
With a good credit score, you can access higher loan amounts and credit limits, providing you with greater financial flexibility for various needs.
Improving your credit score requires careful attention and knowledge of the factors that impact it. Here are a few ways to improve your creditworthiness:
Ensure timely repayment of credit card bills and loan EMIs, as late or missed payments can have a detrimental effect on your credit score.
Avoid submitting multiple loan applications at once, as this may indicate to lenders that you are overly eager for credit.
Regularly review your credit report for any inaccuracies and address any errors immediately. Using Moneycontrol you can track your credit score as well download a detailed credit report for free.
Aim to keep your credit utilisation ratio below 30% of your total credit limit, showcasing responsible credit management.
In conclusion, a strong credit score can open doors to better financial opportunities. So, it’s very important to keep track of your credit health. You can check your credit score instantly on the Moneycontrol app and website. Stay updated and track your detailed credit report effortlessly to monitor your financial health. Explore the Moneycontrol credit dashboard to access your free credit score and detailed report now. You can also explore Instant Loan offers up to Rs. 50 Lakhs with interest rates as low as 10.5% per annum.
Summary
A strong credit score is key to securing the best loan offers and credit cards. Learn more about the average credit score in India according to recent studies.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
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