If you have never applied for a loan or a credit card in your life, then it’s possible that you never needed to check your credit score. However, this doesn’t mean that you should check your score only when you need a loan, credit card, etc.
Even though people are learning about CIBIL and its significance, most still avoid CIBIL score check unless they really need to. This is a wrong attitude to have towards your creditworthiness.
There are many good reasons to check your credit score, some of which are:
- Disputes and Discrepancies
Discrepancies and mistakes in credit reports are more common than you think. This is because banks and credit rating agencies manage the records of hundreds of thousands of customers, and millions of transactions. Thus, it’s possible for a discrepancy to occur in your repayment history or personal details. That said, if it’s left unchecked, it can ruin your credit report badly which can make it difficult to get an ICICI home loan, personal loan, etc. in the future.
Only by checking your credit score and credit report you can identify mistakes if there are any, and have them corrected.
- Identity Thefts
Credit rating firm Experian says that identity theft is the largest contributor to fraud in India. In other words, you are always at a risk of someone trying to impersonate you in the financial sphere and rob you of money. However, you can prevent yourself from becoming a victim by simply conducting a CIBIL score check every once in a while.
If you notice a sudden drop in your credit score or an unusual activity in your report, then it can be a sign of an identity theft. So, you can immediately contact your bank and get it checked.
- Score Improvement
You can’t predict the future. Even if you are financially strong today, you never know when you may need a personal loan down the road. However, in such a situation you must have a high credit score to get one without having a hard time. This is again where the importance of checking your score comes in.
If you want financial security, then you must monitor your score. Most importantly, you should never delay taking the initiative.
- To avoid further damage when about to apply for loans
Whenever you apply for an ICICI home loan, car loan, or rather any type of loan, the bank checks your credit score. If it’s high enough, they approve your loan. However, in case it’s not, then they can reject your application. However, that’s not the only way how it affects you. In addition to a lost opportunity, you also risk damaging your score too. The reason behind this is credit report inquiries.
When a bank requests a credit rating agency to provide your credit report, it’s called an inquiry. So, if one bank rejects your loan, then you may apply at another bank, and then once again, and again multiple times. This means a lot of inquiries are made to the credit rating agency. This is bad for your score as it shows a credit-hungry behavior.
The problem can be avoided by checking your score before submitting your loan application. This is because if your score is low, then you can wait until you have made it better.
With a high score, your chances of getting a loan approved are high. This means there are few inquiries, and thus low to no damage to your score.
- Better Interest Rate
Checking your score also allows you to enjoy great interest rates. This is because when you know you have a high score, you can use this information to get leverage when discussing loan details with your bank.
Banks know that a person with a high CIBIL score is likely to repay their loan on time. So, they don’t mind offering a lower interest rate than the standard for you.
Your credit score plays a big role in your financial matters. So, be sure to check it every once in a while. Besides, it’s free. So, why not?