What is Equifax Credit Score and Credit Report?

What is Equifax Credit Score and Credit Report?

Consider a moment when you yearned for your favourite motorcycle but were strapped for cash regularly. To make things easy, you did apply for a two-wheeler loan. This frequently necessitates conducting research, deciding on a lender, obtaining appropriate paperwork and applying for a loan. What you had to do now was wait for the funds to arrive. You, on the other hand, are in for an unpleasant surprise. The bank turns down your loan application due to a bad credit score.

This may occur with any of us. Many people are unaware of the significance of their credit score until a bank denies a loan or credit card request. Banks and NBFCs may refuse to accept your loan or even another credit request if you have a poor credit score.

So, before asking for any type of credit, it's a good idea to verify your credit score and credit report and, if necessary, enhance your score. We'll go over everything you need to understand regarding your Equifax credit score and the steps you'll need to take to improve your credit condition.

Did you know?

Equifax, the credit information company, admitted in September 2017 that it had been breached, exposing the sensitive data of 142.9 million Americans.

Also Read: Learn about Credit Score and Loan Basics

What Do You Mean by an Equifax Score, and How Do You Get One?

Let's start by learning the fundamentals of an Equifax score. An Equifax credit score is a three-digit figure ranging from 300 to 900 that provides a full description of your credit condition to prospective lenders. A better credit score also referred to as a credit rating, indicates strong credit health and increases your chances of getting a loan or credit card. Simply put, your credit rating impacts your capacity to obtain new credit from the banking sector.

How Equifax Calculates Credit Scores?

Like all other credit reporting firms, Equifax has its specific formula to construct credit scores. Let's take a look at some of the important criteria that go into determining a credit score:

Credit Payback Record

Your credit repayment history heavily influences your credit score. Having a demonstrated track history of paying credit card bills and loan EMIs on time demonstrates trustworthy credit conduct and can help you improve your credit score.

Credit Utilisation Ratio

This is the proportion of credit used to credit available throughout all credit card, credit and bank accounts. A high credit usage ratio (90-100%) or a habit of often maxing out credit cards suggests a greater reliance on credit and repayment load, which may affect your credit score. A low credit utilisation ratio of 30% or less, on the other hand, suggests greater trustworthiness, and it may help you raise your credit score.

Type of Credit Used

The type of credit you utilise (secured or unsecured) impacts your credit rating. It's beneficial to have a balanced credit mix, which includes unsecured and secured credit. When creditors realise that you have managed numerous credit flawlessly in the past, they acquire trust. It improves your likelihood of acquiring a credit card or a loan.

The amount of new credit requests is as follows. Your credit rating may be defined by the number of new credit accounts you have registered for lately. Requesting many new credit cards or loans demonstrates that you are credit thirsty, which can negatively impact your credit score.

Credit History Duration

Your credit score is influenced by the duration of your credit record or the time that credit accounts have indeed been open. Your credit rating is influenced favourably by a lengthy history of prudent credit conduct.

What are the Benefits of Checking Your Credit Reports Regularly?

Regularly reviewing your credit reports will assist you in better understanding your current credit situation. It helps you be more conscious of your future financial needs, and it also assures that all of the data in your analysis is correct and current.

Your credit report may contain inaccurate information, lowering your credit rating. It is always best to grab your yearly credit rating from Equifax and examine it to prevent such unneeded causes.

Because of technological advancements, criminal conduct on your credit card might occur. Tracking your credit history will assist you in keeping track of all of your transactions. Contact the Credit Bureau if you uncover any document that does not relate to you.

Why is it Necessary to Have a Good Equifax Credit Report?

A credit rating is one of the key indicators banks and financial organisations use to establish a user's trustworthiness, and it assists them to make monetary decisions regarding that person.

Because the score is based on a person's credit record, credit, card payments, defaults and other factors, it shows the likelihood of them defaulting on credit and loans. Banks prefer customers with higher credit ratings in general.

As a result, those with a higher credit score can earn lower interest rates, putting themselves in a better position to negotiate better loan terms and other benefits. To do so, one must be aware of the elements that can affect one's credit rating and attempt to keep a decent credit rating.

Also Read: Equifax Vs CIBIL Vs Experian Vs Highmark

CIBIL Credit Score vs Equifax Credit Score

Credit Reporting Bureaus Equifax India and CIBIL are two among them. Clients can obtain credit scores and credit ratings from both credit reporting bureaus.

Equifax India provides major contributing reports that include details about a customer's present and previous credit history. CIBIL also provides credit reports that detail the customer's credit history, including how much credit they've used, how they've returned it and whether they've missed or defaulted on any bills.

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