Do not undermine the power of your CIBIL score

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Your credit score can be the key that unlocks a lot of financial doors, and is therefore one of the most important pieces of information that needs to be enhanced and maintained over time.

In India, there are four credit bureaus that are licensed to operate, namely CIBIL, Equifax, Experian and CRIF High Mark. Of these, with CIBIL being the oldest, very often the term ‘credit score’ is used interchangeably with ‘CIBIL score’. However, you can call for your credit score from any or all of these four bureaus, if you wish to know your credit health in greater detail.

Let us look at the ways in which a good or high credit score can help an individual.

For starters, when you apply for any fresh line of credit – be it a loan or a credit card – the first document that lenders check is the credit report (of which the score is an integral part). Remember, a score is indicative of a person’s creditworthiness, i.e. it helps the lender gauge whether extending credit to the applicant would be wise. It helps them understand the possibility of a loan going ‘bad’. Hence, higher the score better are your chances of being offered credit at the best interest rates and other terms.

Not only financial services, but even employers do check credit scores prior to hiring a person as part of the pre-employment check. This is important especially in cases wherein the job profile involves handling company money, such as the accounts or finance function, or a job role that involves handling sensitive and confidential company information. Running a check on the credit score helps an employer rule out hiring a person who is more likely to indulge in fraudulent activities or other dubious occupations that can damage possibly the company’s finances and its reputation both.

Virtually every person has a mobile phone connection these days. In the case of post-paid accounts, a credit limit is assigned to a person by the mobile phone service provider. This credit limit is dynamic, and one of the parameters used by the service provider by which it is judged, is the credit score. Further, one also needs to provide a deposit prior to securing a phone connection. Again, this amount is determined by checking the credit score. Similar to the lending process, the score is a good indicator of whether the person is likely to default on phone bill payments as well.

Globally, landlords ask for a copy of the credit report prior to deciding whether to rent out their houses or apartments, as collecting rent from an errant person can be quite difficult. Hence, to avoid any possible legal hassles, it is a way for the home owner to choose whether to rent to a particular person or not.

Keeping all this in mind, it is imperative to stay credit healthy, as we have seen that the credit score impacts your financial life to a large extent. In order to stay credit healthy, do ensure that you make payments on any existing loans and/ or credit cards in time. Do not delay payments, and if it is difficult to keep track, consider setting up payment reminders for yourself.

If you think your credit score is low and that your credit health will be impacted adversely, consider availing the services of a credit health management company such as Credit Sudhaar, wherein a trained credit counsellor would be assigned to work with you. Over a period of time, in tandem with the counsellor you can look at not just improving your score but enhancing it. Remember, it is your choice to be credit healthy, and it is never too late to begin!

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