Finding a mistake on credit report can be frustrating. Learn How to deal?

The world runs on the basis of information. Information is everything, what makes an individual powerful is information. Similarly you might be having lots of information about different topics in your life. Some may have information about a new web series to be released or someone might be having information about the latest vehicle which is going on sale next Friday. What makes an individual truly powerful is when the person holds information about finances and how to deal with it. The world revolves around finance and finance is really a vast topic to discuss.

One of the topics which is gaining traction is a credit score. A credit score is nothing but a financial representation of yours in from of your lenders. A good credit score can get you a financial product like a loan or a credit card in no time at all. All you need to do is pull up your free credit report and see how you are doing and keep up the good work. Many a times while checking your report, you see unusual transactions and are in doubt if the transactions are yours? Those transactions can be mistakes done from the credit bureau’s side and you can easily report it and get it fixed.

For a lot of us, we do not have time to check this report and after checking we do not have time to raise a dispute thinking it will be time consuming and frustrating.

Today, we will sight you some simple and easy steps while considering raising a dispute,

  1. Check your credit report from time to time

A lot of us make this mistake of checking our cibil report only when you are applying for a loan or a financial product. You should stop this practice and consider checking your report at least twice a year. You can pull up your report and check it for free and also this would not be considered as a hard inquiry as the report is requested by you.

  1. Check and mark up errors on your report

The next thing you do is, if you find any error on your report highlight the same and raise a dispute towards that transaction at the bureau. You will have t make a proper report justifying why you think it is an error from the bureau’s side and attach all the possible transactional details to support your claim.

  1. Raise different disputes

If there are multiple errors on the cibil report, raise different disputes for different errors. This way you will have multiple people working on your mandate and can expect your work to be done in an efficient and faster way.

  1. Have patience

Once you have raised a dispute, you cannot expect things to happen on a fast pace. Credit bureaus take time to investigate each dispute and it takes a lot of time to reach the conclusion as there are many factors to consider towards the dispute.

  1. Don’t take no as an answer

The credit bureaus with taking a lot of time can also come up with a conclusion which will state that the dispute is been barred and the transaction status remain the same. Do not give up; raise a dispute again if you think the judgment is not in your favor.

  1. See if the error is been resolved

Even if you have won the dispute, you will have to recheck and monitor if the credit score has gone up after the dispute. It should not show a low cibil score after you have won the dispute.

Credit disputes can be frustrating and takes a lot of time of yours. What’s important here is that you get to raise your credit score and it can help you get a speedy loan when needed.

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Why banks provide you a lot of benefits if you have good credit score

What does it mean to have a good credit score and does a good credit rating translate into some actual benefits for you? Credit rating is a statistical tool that gives a score ranging from 300 to 900 to an individual. A score of 700 and above is considered good; obviously the higher it is the better it is for the person whose being scored. A high score could entitle you to certain benefits and you could get some preferential treatment. Here is the reason why banks are willing to offer benefits to those who have a high score.

Why do banks offer benefits for a good credit score?

Credit score are tools that aid the decision making process for the lender. Banks do not accept all loan applications that come to them. They want to provide loans only to those applicants who they feel can be trusted and our capable of returning what they borrow. For this they have a list of eligibility criteria that the applicant must comply to; apart from that they also consider the CIBIL score of the applicant.

The CIBIL score provides them a statistical and objective assessment of the creditworthiness of the applicant. A look at the credit report tells the bank about your credit history and how regular or irregular you have been in the past in repaying your dues. This lets them take an educated guess on the likelihood of you defaulting or not in your future borrowings. The CIBIL report also lets the lender get a fair idea about your overall debt obligation and how leveraged you are. If you already have a lot of running loans then the bank may not want to lend you more as you may find it difficult to repay the dues in a timely and regular manner. The report also contains information about any loans or credit card dues that may have been settled in the past or if there are any other remarks on your past borrowings.

The credit score also gives a risk assessment of the borrower. Looking at the rating the borrower can assess the risk profile of the applicant, since it is an objective assessment there is no room for bias or subjectivity. So a low CIBIL score means that the applicant is a high risk borrower and the converse is true for a high CIBIL score.

Lenders charge interest on the funds lent for the use of funds and as well for the risk of default by the borrower (which they undertake) when they sanction a loan. A high score means less risk which may prompt the banks to offer concessions to the borrower like lower interest rate on the loan, faster processing of loans (lesser time take in due diligence) and waiver of certain fees. Thus a good sore makes you an attractive and creditworthy customer for the lender, they reward this by offering you benefits. A high rating also gives you more choice in terms of which lender to approach, thus you can approach the one who offers the most lucrative terms and conditions for the loan.

Benefits of a Good Score:

If you do not have a high score then it does not mean that you will not get a loan or a card. Depending on the score you could get a loan but maybe at more stringent terms or you may be able to borrow at higher rates from only certain lenders. A very low score would certainly mean that you cannot get a loan sanctioned from the organized sector. Here we take a brief look at the benefits of a good score:

  • Lower interest rates: This by far could be the biggest benefit that you can get due to a good score. Lenders may offer by loan at concessional rates to those who have a good score. Even if the rate is lowered by half a percent then it could translate into huge savings especially in the case of a home loan which runs for long periods and usually run in lakhs.

  • Faster sanction of loans: Banks have to carry out various checks and verification procedures before they sanction a loan. A low score could mean additional check and a more detailed scrutiny. A good score eliminates the need to do so and the lender is willing to sanction a loan with minimal delay.

  • Fee waivers: This is something which will depend on a good score and also the negotiating power of the borrower. So if you have a good score you can negotiate the waiver of fees like the processing fee, legal fee etc.

So make sure to be a responsible borrower as a good score not only makes it possible for you to get a loan but it also entitles to various benefits.

Why you should change or lose a few habits to improve creditworthiness?

Banks are always in the urge of giving out loans to people. The more loans they give out, the more they can earn through interests. On the other side of the game, we consumers are always in need to some loan or the other. There are needs and wants of ours which can only be fulfilled through getting a loan, needs like medical emergencies and maybe wants like buying a luxury car or purchasing a house. If taking a loan is that important, what are the criteria’s which are important to avail any loan.

Your total experience, the company in currently work in, your salary, your existing lines of credit and many more are the criteria’s which you need to adhere when it comes to availing a loan. The most important of all, which determines if you can have a loan with ease, is the credit worthiness. How do you know if you are credit worthy? When you apply for a loan, the banks with other verifications conduct credit verification and check your cibil score. A credit score is a number which represents how you are doing financially.

There are lots of things which add up to your cibil score. Sometimes the credit score is perfect for a loan or a financial product to avail and sometimes you have to work hard to improve cibil score. Improving your bad credit score is a very long way to go and also you will have to look after not to fumble on your way.

Here are some tips on do’s and don’ts to get your score up,

Don’ts

Late payments

This is the most basic practice you can do when it comes to getting your credit score up. Understand your finances and adhere to due dates of your existing line of credit and loans.

Do not carry big balances

Keep your credit utilizations low, let’s take a number here. If you have a credit card with a limit of 1, 00,000 rupees, make sure you only use 40% of it. This will not only keep a cap on spends, but will also help you get your score up.

Defaulting

Do not default any loan and get it to a non-performing account. A non-performing account will not only hamper your cibil score, but will stick to your credit report for a very long time and will make it difficult to get a loan.

 

Do’s

Check your credit file frequently

If you are one individual who has multiple loans and credit lines on your name, you must check your credit score frequently. Sometimes, the credit bureaus make mistakes on your report and you are the one who tends to pay the price for their mistakes.

Create a healthy relationship with your bank

Your banks are the one who send reports to the bureaus on a frequent basis which adds up to your credit score. if you happen to skip a payment or two, you can explain your situation to the banks and they can on their discretion give you time to make the payment to avoid the loan defaulter list. Not only credit wise they can also help you with speedy loan process, if you are in need to one.

Use variety of credit lines

If there are multiple credit lines towards your account, here are high chances to get your credit score up in no time. More the credit lines and loans, more you will be looked as credit worthy and the one who takes their financial seriously. Just do not default any payments as this can work vice versa.

Just by improving basic financial habits, you can help your credit score grow in a positive way. Simple financial integrity can help you in many ways you can imagine.

My Credit Score is 500. Things You Should Do Now

Well first things first, a credit score of 500 is not good news. However having said that, do keep in mind that it is also not the end of the world! As you may be aware credit scoring is done on a scale of 300 to 900 and higher the score is, the better it is for you. Any score below 700 could spell trouble if you are looking at getting a loan sanctioned or even getting a new card or a job. So if you are reading this, it means you are looking at working on your score and trying to make it better.

  • Get Your Credit Report:

Even though you know that your score is low, not much can be done till you get a thorough look at your credit report. The credit report gives a detailed and comprehensive view of your overall debt position and also lets you analyze your credit history. Going through your credit report will help you identify the cause/s for your score being low. You may sometimes be aware of the problem but it is always better to get the report and identify the reason/s for the low score. A score of 500 will not be caused due to a few missed payments or excessive use of credit card in a month or two, the cause is likely to be more serious.

  • Clean Up Your Act:

Going through your report will let you identify the problem areas that are the cause of the low score. Once you have that information you need to start working on these aspects. So if you have an open loan that you have paid fully, then get the NOC so that it is closed in the credit report too. Pay old dues but make sure the accounts are reported as closed and not settled; a settled account will raise red flags in the minds of all future lenders. If you have been irregular in paying your dues, going forward you need to start paying on time as this is the most important component of CIBIL score calculation. Also keep a look out for any erroneous reporting that may be causing the score to dip.

  • Have a Disciplined Approach:

Once you have zeroed in on the cause of the low score and how to deal with it you need to have a disciplined approach if you want your score to improve. If the cause is high credit utilization ratio then you need to exercise restraint when using your credit card. You need to fix a limit to your credit card usage and then you need to stick to it. The same applies to paying your dues on time, as we said above this aspect influences the credit score to the maximum extent. Make sure you pay all your EMIs and card dues on or before time, always!

  • Be Patient:

Another aspect to bear in mind is that credit scores do not improve or go down overnight. The score is a reflection of your credit history which starts from your first card or loan. So if you have been an irresponsible borrower in the past and are looking at improving your score, bear in mind it will take time especially if your score is 500. Being disciplined and patient are keystones of improving your CIBIL score, so be responsible in the future and don’t hope for miracles. Though loan for low CIBIL score is an option offered by few lenders yet it is not advisable to do so as it can cause further damage to your already strained credit health. Wait for the score to improve before you go out looking to borrow further.

  • Seek Professional Help

You can definitely try to improve your score on your own but if you feel that things are too complicated or you are unable to identify the cause of the low score then you can seek professional help in trying to improve your score. Here it is important to remember that no one can remove any negative item from your report, professionals can only help you identify the problem and offer you a solution. Being disciplined rests on you, they cannot offer you quick fixes but they are better equipped to deal with such situations. .

As we said earlier, though the score of 500 is low and is definitely a cause of worry, however there is no reason to despair as you can work on improving it.

Can unused credit cards impact your credit profile?

Credit cards have become an important part of our lives. With various options and lucrative offers available, it becomes so difficult to choose what fits best for our needs. From various offers on dining to broadways, air miles, reward points, shopping experiences and what not is offered in various types of credit cards. But, technically, when we opt for too many credit cards with an individual offer, it can be a possibility that we may forget some.

Let’s understand this with an example. Priya was a very passionate young achiever at a good position in an MNC. She has achieved a lot in that young age. Obviously, with that age and that position, she was on cloud nine! With that age, she was also attracted to those offers of the credit cards which the banks had offered her. Some credit card with air miles offer, some had dining offers, some gave her amazing reward points and what not! Now when she had more than five cards, at times it becomes difficult for her to manage. So, eventually, she picked two best of cards which could give her maximum benefit and rest she kept aside.

Now, she did not close those credit card accounts and thought that would work as she wasn’t using them. After a year or two, she wanted to buy a house and planned to apply for a loan. To her surprise, her loans were getting rejected as her CIBIL score was not up to the mark. The question may arise is, what is CIBIL score? And what is it’s an effect on loan sanction? A CIBIL score is a 3 digit number that ranged from 300-900 where 900 is highest and 300 is lowest. It is determined by five factors. Payment history, an amount owed, length of credit history, type of credits and new credits. Any loan or credit applied for is the major reason why and how the score is what it is. Higher the score, more are the chances of loan application getting approved. How is this score diversified? 750+ score is always considered a good score. Anything between 600-750 is average score and anything below that is not considered a good score or we can say a bad score.

Priya, when wasn’t using her cards, she forgot the fact that each credit card has yearly charges. When not paid, they can keep on getting added to your account, in turn, adding more amount to it as delayed payments and added interest charges. What she couldn’t figure out, and because of delayed payments of that or we can say missed payments this amount kept on increasing which decreased her score and getting the loan application rejected!

What did we get from this example? At times, when we decide to not use the credit card anymore, we must either close the account or if for length of the credit history if we want to keep that open, every six months, we must check are CIBIL score, and the report in order to get an idea if we are not missing on anything which is making outscore low! We should always remember that the score can take no time to go low, but will require more time to get it on track. You must be paying all the credit bills on time, you must not be missing on any EMIs that are scheduled, but an unused credit card’s yearly surcharges may just drag the score down.

Always remember, an open credit account will have its repercussions, so either one would close the account they aren’t using, or if it is kept open, the yearly fees or are other charges should be taken care of and paid. Especially the once of unused credit cards!

Patience is the key to rebuilding your credit score after bankruptcy

What is bankruptcy? Bankruptcy is a state where the borrower who has borrowed the money from a bank or any financial institution, puts the hands off from the credit or the debt that is taken and denies to pay it anymore. There are two types of bankruptcy. Wilful bankruptcy one where the borrower says that he or she does not want to pay the debts anymore because they do not have adequate funds to repay the debts even after considering that all the property or assets which they have been diluted, the loan amount still is much higher than it. And the other one is where the borrower says with his or her wish that they will no longer pay the balance amount of the loan and want to declare the bankruptcy.

In either of the case, if genuinely the borrower has no money or if they do not wish to pay the money, the bankruptcy will be reflected in CIBIL Report. Once the bankruptcy is reflected in the report it will take seven years to start it again. For the next seven years the individual will not be able to borrow any loan or credits from any banks or NBFCs or any financial institutions. By that that what they can do is, if they have any secured type or credit like secured credit card: where FD is kept against the credit taken and just in case that if the borrower denies paying the bill, the amount can be deducted from the fixed deposit that is kept against the credit card, or any of the loan which has collateral like gold loan or home loan where the asset is there against the amount can be tried to apply for. In such cases, eventually, even if the credit score is on the toss, they still can say that the history of past years on other credits has been taken seriously.

Bankruptcy has a huge effect on credit score. It’s like the “it will take a decade to be okay” thing. As said earlier, it will take 7 years to get that title off the report. But along with this the name also will reflect in loan defaulter list. With multiple attempts and many years of serious practice of repayments of the credits that will then be taken may change a bit. Even in the usual case when the score dips, patience is the first thing one has to keep to get the scores up. It is not difficult to get the score above average. That comes with a question what is a good score? So, credit score is a 3-digit number, ranging from 300-900. any score which is 750+ is considered a good score. Ranging between 600-750 is an average score and the lesser than 600 is into the poor score.

Bankruptcy comes under the negative flag which once tagged, takes many years, seven specifically to get it out of the CIBIL report. Get it out does not mean that after 7 years the entry will be marked off and will no longer reflect the report but it means that the effect it has on a report which will not allow the lenders in usual cases to approve the credit application will go mild. Also, with all the patience and the hard work one must show in the other credits they have had in past years will show up in the report.

It is understood that a decade is definitely 10 years and will take a lot to again get that score back to 750 or more, but the event of a bankruptcy is that huge. Patience is all one can keep so as to make the effort and be diligent in repaying the new credits on time without delay or the missed payment and the hard work will surely pay off!

Pay Your Credit Card Bills Before Due Date to avoid low Credit score

Who is a responsible person? An individual who is always taking care of the liabilities that are on him/her. When we talk about a financially responsible person, is the one who is able to keep a balance between the spendings and savings. Further bifurcating, a person who has applied for any type of credit is responsible when he/she makes the regular payments of the credit that they have taken. And when it comes to a credit card, it’s the one who pays the credit card bill in full amount on or before the due date. The question may arise is, why?

A credit score is an important aspect of today’s lifestyle where many of the people work on credits, Credit Cards, and loans taken from financial institutions like banks and NBFCs. The credit score is determined by five factors, Payment history, Amount owed, Credit mix, New credit and Length of credit history. Here, the most import and the highest weighted parameter is Payment history. It consists of 35% of the whole score. One may check the score from any of the credit bureaus that are established in India viz. Transunion CIBIL, Experian, Equifax, CRIF Highmark, they have the same score of 35% for payment history. Paying the bills of the credit cards and paying them timely shows that the borrower is accountable and serious about the credit that he/she has taken and the leverage that has been given to them.

Some may say that a few missed or late payments do not make a much difference. But, one should never listen to them. If not initially, but definitely eventually the credit score will get affected. Because eventually it will be a habit and then the score will take huge dips. There have been many examples that few missed and delayed payments a decade ago, which are obviously reflected in the credit report affected on the approval of bigger loans like home loans or business loans now. They either were not able to get the loan approved because of the small careless attitude a decade ago and they were to end up paying a huge amount of interest as they had Low CIBIL Score. The score ranges from 300-900 where 900 is highest and 300 is lowest. 750+ score is a good score, 600-750 is considered average and any score below 600 is considered low or bad score!

Let’s understand this by one of the examples. Sanjay, A 34 years, IT analyst is a project manager in a reputed firm. He has been living away from the family since he was 18. I.e. much sooner as he completed his 12th-grade studies. He did his bachelors and started working at the age of 21. he got the credit card when he was 22. He then took an education loan at 25 and persuaded his masters. First few months were okay as he had saved while he was working. But, later at the end of the third semester which is a year and a half after he started doing his masters, all his savings were exhausted and he then started to use the credit card. Since there was no source of income and he did not want to ask his parents, they were almost seven to eight months where he either was paying the only minimum due or sometimes skip paying the bills or multiple late payments. He knew he was not doing correctly. So he went to the bank and asked them to close the account and then forgot it. Much later, when he was 32, he wanted to buy a house and so he applied for a home loan. And when getting it rejected he checked his credit score and credit report. He had Low CIBIL Score and the major reason was that card which had applied to close it for. It took him two years to get the score in level and had to anyway pay that amount plus the interest that was charged for these many years!

So, if you have a credit card or you may have credit cards, make sure you do not make defaults or do late payments or miss few payments as it will affect the credit score and that will be always reflected in credit report!

Is it easy to get a Credit Card for a Self-Employed Person?

You are standing at a store, with all the things you wanted to buy, waiting for your number to pay and collect all kinds of stuff and leave for home. While counting the money you have there ate 2100 Rs less than the total bill that it is. But whatever you have bought is all important at this hour you cannot drop any item of the one that has picked. Now? There have been many situations like these were just for few of bucks you would have to think now what?! it’s like that embarrassing situation where you really can’t think of anything cause borrowing or asking from someone for the cash is odd!

Credit cards work best in such cases. Credit card as we all know are a boon where we have the privilege of using the money that we do not possess right now! You use the money now and pay it later. In usual cases the next month and if it is in EMI module of a few purchases that you pay it in the monthly small amounts divided by the merchandise company. But the whole point is that it’s not at the same moment. So while having the emergency it’s best to have one. Now the question is: how to get a credit card? Who can apply for it? Or can everyone get it? There are certain criteria for the approval of credit cards.

1. The primary holder of the card should be 18+ in age

2. The applicant should either be a working professional or self-employed with a regular source of income

3. There should be a saving account on his/her name

4. There should not be any bad defaults that must have been made in past

With these criteria, the credit score is also one of the factors that are checked before getting a credit card approved. The credit score is established only after having a credit for six months, so what if someone who has never applied for any type of credit or they have not taken any loan? With the fixed income of a few months and checking other parameters, the credit card can still be approved even after having no credit score. It might not be the one with a huge credit limit, but a one with basic credit limit can be applied for and will get approved. Also, the usual credit cards and an unsecured card where the credit line used is first paid by a bank to the purchase place, and then the user pays it to the financial institute. However, there is an option called as a secured credit card. In Secured type, the applicant has to keep a fixed deposit of the amount which they want the card limit to be. Any bank will approve this credit card as they do not have a risk here. Even if, just in case the cardholder do not pay the credit used, they can always get it from the fixed deposit that is been made.

Coming to the topic if a self-employed individual can get the credit card easily. 2 things. A. If they are planning to get a secured credit card, that is no brainy. They will easily get it. B. if the income of a self-employed individual is very much constant from a long time, they will still get it pretty easily. But, what if there is no constant income or the self-employed individual has just started? In such a case, it becomes a little difficult to get the usual unsecured type of credit card as a primary holder.

In such scenario, they can always take a secured credit card for starting and after it’s regular usage and repayment they can always talk to the bank, ask them to check the report and get the normal credit card approved and that will be quite easy!

Mastering the 5 Rules of Good Credit Health

A credit score is a key factor that is considered by lenders before approving any kind of loan. Even interest rates are also based on the credit health of the individual. So if you aim to achieve a perfect score you must master the 5 rules of good credit health.

Always pay your EMIs and credit card bills on time

Lenders essentially check your credit score to analyse your likelihood of paying back the debts. A good payment history is the key to establishing a good credit score. A responsible and reliable behaviour boosts your credit health. A single missed payment can cause a drop of a hundred points in your credit score. Defaults that are more than 90 days late are the ones that affect the credit score the most. So always pay your bills on time. It is always better to set payment reminders or enrol in automatic payments. Make sure you pay at least the minimum amount on the credit card bill even if you face a cash crunch in a particular month. All late payment records make their way to the credit report and affect your credibility in the eyes of the lender. In case you accidentally missed a payment you can call your lender to explain the situation. He may agree not to report the information to the bureau if you pay the bill and bring your account current.

Keep your credit utilization levels low

The amount of debt that you owe as compared to the overall credit limit determines your credit utilization ratio. Experts recommend that one must keep the utilization levels to below 30% in order to improve CIBIL score. The easiest way to ensure this is to pay off the entire outstanding balance at the end of each month to free up the credit limit. But sometimes the ratio is calculated using the balance outstanding at the time the bill is generated. If one charges too many expenses to the card, the credit utilization ratio may be high even though the entire bill amount is paid. In such a case it is wise to make payments twice a month.

Some other ways of improving the ratio is to request the card issuer for a credit limit increase. One can also open another card and keep low balance on it. This will increase the total credit limit available for use and improve one’s credit utilization ratio.

Monitor your credit reports

Your credit report is a record of how you handle all your debts and serves as a basis for credit score calculation. Inaccurate recording of information by the bureau or identity theft cases can negatively affect your credit health. Check your credit report from all the major credit reporting agencies regularly to ensure that the information recorded there is correct. If you find any errors in the report you must get it rectified by raising a dispute with the bureau. The bureau usually takes 30 days to investigate the issue and update the credit report.

Be strategic about taking new debts and closing old accounts

Credit scoring models take into consideration new enquiries for CIBIL score calculations. Applying for too many debts in a small period of time will result in a lot of hard enquiries and affect your credit health negatively. It raises a red flag for the lenders signalling that you may be a desperate borrower who may not have the ability to repay the loan back on time. So do not apply for too many loans or credit cards at the same time. It is better to spread your applications over a few months.

Do not close your old accounts as the length of the credit history plays a significant role in establishing your credit health. Having an available credit limit on unused old credit cards helps in keeping credit utilization levels low. Also if you have a good payment track record on an old account, it is good to keep it open so that it affects your score positively.

Consider credit mix

Scoring models also consider the type of credit that a person takes on. A good credit mix of both revolving as well as instalment accounts helps in establishing a good credit rating. So if you show that you can responsibly handle repayments of different types of financing tools like credit cards as well as personal loans it will be good for your score.

Mastering these 5 mantras is the recipe for a good credit score.

Reality about Credit Score No one will Tell You

Having a good credit score is no longer an option these days. It is necessary to have a good rating as it determines your creditworthiness and your eligibility for the loan. No bank or NBFC sanctions a loan without checking your credit score. The approval decision, amount of loan and rate of interest at which the loan is disbursed, everything is based on the credit rating of the individual. Let’s look at some important credit score facts that one must be aware of in order to maintain a good score.

Do we have more than one credit score?

There are many credit bureaus in India that receive information from the member banks and financial institutions regarding the borrower’s credit behaviour. These are Experian, CIBIL, Equifax and CRIF High Mark. Each bureau may receive updated information at different point in time, hence the information in their credit reports may vary. The scoring model that the bureaus use to arrive at the score also differs. Hence the score that you get from each of these bureaus may differ slightly.

What does a credit rating of 0 imply?

A credit score of 0 implies that one does not have any credit history till now. The credit bureaus that maintain the record of people’s credit behaviour haven’t received any information about your credit behaviour from the member banks, NBFCs or private lenders. By using a credit card or by taking a loan one can start building a credit history. When you charge your expenses on the card, and make timely payment of bill at the end of the month, the payment behaviour gets recorded on the credit report. Similarly payment patterns of EMIs on loan are also reported by the banks. The information on the credit report forms a basis for calculation of CIBIL Score.

What things one must take care to prevent the CIBIL score from falling?

Make all the payments in a timely manner. Any default or late payment reduces your score by a few points. It is a good habit to pay the entire credit card bill and not roll over your balance to the next month. Paying only the minimum balance helps one avoid the late payment fees, but doing so will not free up your credit limit for next month’s expenses. A high credit utilization level has a big negative impact on your CIBIL score.

Will a poor score haunt you forever?

A credit score is just a snapshot of your financial situation that your credit report shows at a particular point in time. When new information gets added to your report, the score will change too. If you have a low score because of your past credit mistakes, it does not mean that you are doomed forever. With consistent good credit behaviour you can get your credit profile back into shape. Pay attention to the factors that help in improving your score and you can improve your credit

Will becoming a guarantor or a co-signer prove risky for your score?

If you help a friend in getting a loan by becoming a guarantor or a co-signer then you put your credit history at risk. Make such commitments only if you are sure of the other person’s repaying capacity. If the borrower does not make timely payments you will be responsible to clear the debt. The loan will be considered your liability. If you fail to make payments on behalf of the borrower then your credit score will take a hit.

Checking your own score will not affect your score negatively

When you order your credit report from any of the bureaus it is considered as a soft inquiry and it does not affect your credit score at all, no matter how many times you check. In fact one must check the credit score regularly. It not only gives one an understanding of one’s credit standing but also helps in uncovering mistakes or errors on the part of the bureaus. However if a lender or a card issuer checks your score to base their approval decisions, it is considered as a hard enquiry and may impact your score for a short term by a few points.