A 900 credit score is epitome of financial discipline. But can we achieve it and does it make a significant financial impact from almost perfect? Let’s strip out the myths from reality.
What is a 900 credit score?
Indian credit scores range between 300 and 900, of which 900 is issued by credit bureaus like CRIF High Mark, TransUnion CIBIL, Experian and Equifax. 900 indicates flawless financial conduct, timely payment, minimum utilisation of credit, and balanced credit utilisation ratio. It is nearly impossible to have a credit score of 900.
Still, though improbable, it is entirely possible to have a very high score. It requires years of good fiscal management, for example, not missing a payment and having an old credit account and maintaining the same for decades.
Reality check: Is it needed?
While a 900 credit score represents stellar creditworthiness, financial advisers claim that it may not have significantly more advantages compared to a score above 750 or 800. It is also nearly impossible to have a perfect 900 score because there is always credit utilisation involved with credit cards and credit profiles.
The majority of Indian banks and lenders rate a score over 750 as top-notch, which makes the borrowers eligible for the best terms of loan and top credit cards. As Warren Buffett has said, “Do not save what is left after spending; instead spend what is left after saving.” The slogan elaborates the policy of fiscal restraint before pursuing ideas based on lavish expenditure.
Further, the other clauses like stability of earnings, repayment history and honest commitment are also taken into account by lenders in accepting the loan offer. A flawless score will set you apart but guarantees no higher advantages than an “exceptional” score.
Myths vs. Facts
Myth:
- A 900 score ensures the loan.
- Debt is not needed to achieve 900.
Facts:
- It will most certainly work in your favour, sure, but income and employment history count just as much.
- A respectable amount of adequate credit usage (i.e., low usage rates) is a prerequisite for good score. This is why getting a 900 score is nearly impossible. Whereas getting a very high score is entirely possible.
Lastly, attempting for 900 is wonderful but sensibly set a goal for a high attainable score (750+) instead. Sound money management practices are what ultimately lead one to good monetary opportunities in India.
