Get answers to all your questions about your credit score and the OneScore app, explained in a simple and easy to understand format.
A Credit Score is a number calculated by a consumer information company or bureau. This score usually ranges from 300 to 900 (both inclusive). It is a measure of the creditworthiness of an individual - or the probability of repaying future loans based on past performance on previous loans. It uses available information from your credit report to predict the risk of you not paying that loan back. Someone with a long history of timely payments will tend to have a high score and someone with multiple missed payments will tend to a low score. Other factors like utilisation, outstanding loan amount, types of loans, demographics, and enquiries also affect the score. The approved credit information companies or bureaus in India are CIBIL, Experian, CRIF High Mark, and Equifax, all certified by the RBI.
Generally, a score greater than 750 is considered to be a good score. However, different banks and NBFCs have different lending criteria and hence it is always prudent to enquire with the institution.
The method used to calculate score varies from bureau to bureau and they would consider different factors when calculating the score. The credit scoring algorithm is proprietary to the bureau and is updated regularly.
A high score increases the chances of getting a loan approved. However, each lending institution has its own lending policy which is dependent on many factors. Some of them are: Age: Most institutions have an age bracket within which they lend. Age represents a degree of financial stability and repayment ability. Income requirements and proof: Minimum income requirements vary from product to product. A durable product like a mobile phone will have a lower income requirement than that of a home loan. Lenders also require income proof such as tax records and bank statements. Number of accounts: A high number of accounts indicate that the consumer already has an unreasonable amount of credit. Loan Amount applied for: Loan approvals are dependent on the repayment capacity of the individual. Higher loan amounts usually mean higher EMI. Thus if an institution deems that the EMIs may be too high, the loan may be rejected. Status of account: If you have repaid a loan in the past, it aids you in future borrowings. More closed accounts enable you for further, better loans. Past loan accounts written off with suits filed or settled are red flags for an institution. Work Experience: Lenders often visit employment records to assess the capability of the borrower to pay back. In many cases, consumers with high scores have been rejected for loans. A consumer has the right to enquire about rejection reasons from the institution.
All the 4 bureaus get the same data from the banks and the score range for their scores is also from 300 – 900 (both inclusive). However, the algorithm and scale that they use are their own intellectual property. Also, even though the factors affecting the score might be very similar across the bureaus, their exact weightage might change. Hence, the different scores across bureaus.
Having too many credit cards with either high balances or large amounts of credit available can negatively impact risk scores, depending on your overall credit history.
Every customer is eligible for one free report per year from every bureau. These reports contain the credit score along with the financial summary of the individual and can be generated on the bureau’s website. Thus an individual can get 4 free reports every year. The OneScore App fetches your credit score from the bureau and keeps you up-to-date with regular reports and advice on how to improve your score, free of cost.
On getting your score, you should ask ‘Is this an accurate representation of my payment history?’. Read the report in depth and make sure that all the information is precise and correct. Any inconsistency or error should be immediately highlighted to the bureau. The customer has a right to file a dispute and get it resolved promptly.
Improving one's credit score is like getting fit. The worse the score is, the longer it’s going to take. However, the principles are the same. One must exercise discipline in terms of expenditure, reduce the previous delinquencies and continue doing it consistently, month in, month out. Lower utilisation your credit cards, make timely payments of other loans and avoid credit inquiries. The results take at least a month to show, and if one is able to sustain it then no mountain is too high.
Any increase in the score will take at least one month to reflect. However, there are many steps that may be taken to achieve it. • Paying off all the delayed/defaulted/written off accounts and closing them. • Consolidating similar types of loan into one. For example, if an individual has 3 Personal Loans, he/she might want to consolidate them into one Personal Loan at any of the lending institutions. • Reduce the utilisation of credit card bills and paying them off, even before the statement is generated. • Avoid enquiring about any new loans with any lending institutions. Even though these steps are advisable, it may still be some time before an increase in score is observed. The key is to not get disheartened and stay consistent. Avoid going back to the (not so) good old days!
The absence of a score may be due to multiple reasons. In case an individual has no accounts with any lending institutions (No Loan, No Credit Card), then there will be no score, as there is no history on which the score may be calculated. For cases where there is a credit history present, the absence of a score might stem from the fact that the last activity on the account is more than 36 months old. In such cases the payment history is deemed to be too old for an accurate assessment of the customer. Thus, the customer wouldn’t have any score. Thirdly, and the least likely reason might be a system/data error. In such cases a query raised with the concerned bureau will be enough to solve it. The bureaus are usually more than happy to share the updated report along with the score, at no additional cost, in case of an error.
The score is updated based on the new information that is available to the bureau. This information is shared monthly with the bureau. Hence, any change in the score may take at least a month to show. Furthermore, even in cases where new information has been provided it is possible that the new score is the same as the last one. This can be identified by comparing the reports of two months. In case the information isn’t updated even after more than a month, the customer should immediately reach out to the concerned bureau and raise a query.
Scores can fluctuate slightly from month to month. A difference of 15-20 points is within the acceptable limit. If the account and payment information in the report are as expected, then there should be no cause of alarm. A further increase in score is a sign that the consumer has shown good financial behaviour in recent times. The increase is an acknowledgment of this. A higher drop may be due to any written off account, delay in payment, high utilisation or new inquiries.
No. Your score will not be impacted as this is for your personal use and knowledge. It is known as soft enquiry and does not affect your score.
In some cases, there may be inconsistencies in the report. When it happens the customer should immediately reach out to the bureau and get the query solved. In case the discrepancy is at the lender’s end, the same will have to be contacted for rectification of the mistake. It is crucial to iron out all inconsistencies in your report.
In a credit score, a bad behaviour has an immediate and lasting impact, whereas the good behaviour has a gradual impact. As a rule of thumb the effect of bad behaviour lasts for at least 3 years. Thus in case an individual knows that he/she is going to default on his payment, then he/she should talk to the lending institution and negotiate a way to avoid it. A mutually acceptable plan may be charted to help the individual meet his/her loan obligation.
Ideally, all loans should be paid off in full. In any case, the individual should contact the lending institution to draw out a repayment program, which is beneficial to both parties. Also, post all the payments have been made (with the original or by the modified plan) the individual should make sure that the updated status (closed/non-delinquent) is reflected in the report. In case the account was closed, it is imperative to ask the lending institution to show the same in the report. It is also advisable to obtain a copy of complete payment and account closure from the bank at the time of the payment.
Your credit report does not contain — data on race, religious preference, medical history, personal lifestyle, political preference, friends, criminal record or any other information unrelated to credit. Your report is merely used to assess your creditworthiness.
Your credit score is only part of your credit report. Your credit report covers your entire history of dealing with credit (loans and credit cards) including your history of payments (on time or delayed). Your credit history would also show the current status of each credit account – active, closed, delinquent, settled etc. These as well as other details of your credit report form the basis of your credit score.
Credit report errors are classified into 3 categories – Identity Errors – Credit reports are based on information received from banks and NBFCs in India, hence some errors like your residential/office address might be out of date as your bank/NBFC has not reported this information to Experian, CIBIL or Equifax. Usually this information has no impact on your credit score. Another case is when you share the same name with another bank customer and the records get switched due to a clerical error. This can have a significant impact on your credit score hence it is best to get such reporting errors corrected. Incorrect Account Information – This mostly occurs when your current or previous lender provides incorrect details or the credit bureau makes a mistake when processing the information received. Common examples include incorrect loan account balance, incorrect credit card limit, mistakes in loan origination date, etc. Fraudulent Accounts – This is the most serious type of error and it does not result from reporting or typographical errors. This can only occur if you are a victim of identity theft and someone is taking loans or opening new credit card accounts using your information such as PAN card number and ID card. You definitely need to report this to your bank and current lenders as well as get in touch with the credit bureau to get these details rectified.
Absolutely. In fact the usage of our apps and it’s services too are free and will continue to remain so. No trial periods, no ads, no spam calls. In future we might launch some financial products of our own. Those may (or may not) involve a small fee. But the scores and insight features are and will remain free for life.
Most of the other companies who provide free scores, are loan aggregators. They identify consumers with high scores and then share the data with their partners. This results in spam and unsolicited calls. We at FPL on the other hand provide you your score along with custom insights specific to you. Also, our OneScore app does not ask you for any permissions at all. Our financial products when launched will only connect with you via the app and there is no compulsion on your part to use those products/services.
We aim to make money from future products and services that we desire to launch through the app.