How to Make a Good Credit Score Even Better?

We live in a time where having a good score is crucial for financial security and a comfortable life. However, the question is- what exactly is a good score?

Generally speaking, if your CIBIL score is below 600 then it’s considered a low CIBIL score, and if it’s above 750, then it’s considered a good score. But here is the thing- you should never be happy with your score.

It should be one of your continuing goals to improve credit score even if it’s good enough. This is because if you stop caring, your score can drop over time and become a “poor score” one day without you even knowing. In addition to that, working towards the best possible score ensures that when you need a loan or a credit card, then you are able to obtain them without any problem and at attractive terms and interest rates.

How do you make a good score better?

There are many things that you can do to take your score from “good” to “great”, such as:

Don’t Break the Streak

Since you don’t have a low CIBIL score, it means that you have been paying all your loan EMIs, insurance premiums, and credit card bills on time. So, if you want to increase your score, even more, it’s important that you never break this habit. In fact, you should do whatever it takes to never miss a single payment.

Your repayment history is one of the biggest factors to affect the credit score. In some credit rating agencies, it can make for as much as 30% to 40% of your entire score! Thus, the only way to improve credit score on a constant basis is to be punctual with your payments at all times.

Create a Healthy Credit Mix

Did you know that by simply increasing the variety of credit in your report you can easily increase your credit score by 10% to 20% or even more?

A lot of people are able to push their score only to a limit because their credit report is based on just one type of loan or credit card only. So, if this is the case with you as well, then you can add new credit profiles to your portfolio and see the magic happen! For instance, if your experience with credit in life is only on the basis a personal loan, then you can apply for a credit card or a car loan. You are sure to notice a major improvement in a short period!

Develop a Habit of Frequent Report Checking

If you can’t remember when the last time you checked your credit report was, then it’s something to worry about.

Monitoring your credit report is extremely important when you want to increase your CIBIL or credit score as much as possible. This is because it helps you track your progress and alerts you when or if your score starts to drop.

Checking your CIBIL report frequently also helps you prevent identity thefts and other frauds that can rob you of your savings and even greatly harm your credit profile as well.

Put an End to Your Credit Card Debt

If you love to use credit cards but make minimum payments more often than not, then it’s possible that you have a huge debt on your card(s) which is really bad for your score.

Although technically you are allowed to make minimum payments to avoid penalties and other kinds of charges on your credit card bills, from your credit score’s point of view, it’s bad. In fact, if you apply for a new loan then it’s quite possible that the lender will reject your loan application even if your score is high because of your high debt.

When it comes to credit score, it’s important to remember that you must not rest on your laurels once you have secured a good position. You must always pay attention to your finances to ensure that your score not only stays high but also makes an improvement over time as well.

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Till How Much Time Will Negative Information Be On My Credit Report

Credit Reports are all about your credit history and information related to your loans and cards. There are details about when the loan was taken, how much is the loan, when you missed a payment, when you pre-paid a loan and so on. A common question that comes to mind is, till what time does each information stay on your report. A few questions that may arise in mind are:

  • If I missed a payment a year back will it be there on my report?
  • I applied for a loan about 6 months back, a hard inquiry for it was made by the bank, will it still be there in my report?
  • If I settled a loan about three years back will it be there on my report?

All of you might have similar questions about your credit report, so let’s find out that till what time does any negative information stay on your report, well we are not so bothered about the positive information.

How Long Does Negative Information Stay on the Credit Report?

Credit reports have the different type of information that relates to your debt. Each type of information is treated differently when it comes to score calculation and the duration for which it stays on the report also varies. Below we discuss the duration for which different information stays on your CIR:

  • Missed and Delayed Payments:

Accounts information section of your credit report contains information about the repayment history of your debt including various loans and credit cards. Repayment history is the most important aspect when it comes to credit score calculation; this section contains payment details of all loans and credit card dues for last 36 months apart from all the other details about loans and cards. So if you missed a personal loan or a home loan EMI it will continue to reflect in the report for 3 years and every time your report is pulled in the meantime it will be reflected in it. Of course, recent defaults impact the score calculation more than older defaults but the older defaults (up to 36 months) do stay in the CIR.

  • Settled Loans

Settled status for a loan is one of the worst things to have in your credit report and what’s more is that it stays on your report for seven years. When you pay all your loan dues diligently than the loan status is shown as “closed”. However, when you do not pay the whole amount that you owe to the lender but pay an amount less than what is owed to the lender then the loan status is shown as “settled”. A settled loan always raises red flags for future lenders as they are not sure if you can be trusted to repay your dues in full. A settled loan will show in your report for seven years which is a pretty long time; getting fresh credit with a settled account status could be difficult so think carefully before you decide to settle a loan. Of course, a loan that is settled more recently than a loan that was settled years back is viewed more negatively but the impact of a settled loan may be influenced by other factors on your credit report too.

  • Credit Enquiries

When you apply for a loan, the first thing the prospective lender does is seek the applicant’s credit report; this is known as a hard inquiry and is reported in the CIR. Each hard inquiry impacts the credit rating and lowers it. However, if you decide to check your own score then it has no impact on the credit score. It is recommended that you get a free CIBIL Report or a credit report from other bureaus once in a while to assess your credit health. Hard inquiries stay on the report for a period of 24 months but only enquiries made in the last 12 months impact the score calculation, after that even though they will feature in the report they will not impact the rating.

So now there is more reason for you to be careful with your debt. Irresponsible treatment of debt could remain in your report for the duration ranging from 2 years to 7 years as discussed above and could impact your chances of getting fresh debt.

 

The Laziest Way to Improve Your Score

There are a lot of things in life which you want to do. There are many of us who try to find the easiest or let’s put it this way find the laziest way to do things.

There are a lot of people who spend a lot of their energy in maintaining a good credit health and find ways sitting online finding solutions on how they can improve their score. Most of us know why we should maintain a good credit score and how that can help us the long run.

But is there a laziest way to improve your credit score? Well we have good news for you today, yes! There is a lazy way to build your credit score positively.

Usually a credit score is a number which ranges from 300 to 900. If your score is anywhere ranging between 750 and 900, it is considered to be a great cibil score. This score range can help you get any type of loan in no time. With such score you can opt for maximum amount of loan sanction and also can negotiate further with the lender on interest rates and processing charges.

A good credit report will add good value to your financial lifestyle if adhered properly. An individual with good credit report enjoys a lot of privileges offered by financial institutions and lenders which helps the individual in long run.

Here are easy ways to improve your credit score,

  • Older the account, better

The age of your credit roughly contributes 15% of your overall cibil score. The credit bureaus always give priority to applicants who have longer credit reports. Would you lend money to an individual who just started or someone who has a credit history of 10 years?

A bonus tip would be to never close a credit card account if you have one. Just try making small transactions every month and make the payment on time, this will help you to improve the score and also will make the account old. This will help you get your cibil score up.

  • Let the bank make your payments

There are a lot of promotions going on in today’s market which endorses auto payments. If you have different loans on your account, you will have to make all your payments on time. What better way to opt for auto payments. In such scenarios the bank will take care of your payments, you just have to maintain sufficient balance. This service is absolutely free of cost and you do not have to worry about EMI dates, the banks will take care of it.

Making payments on time contributes a whopping 35% of you credit score.

 

  • Stop credit hunting

Do not fall for the tele calling companies who call you explain great offers on loans and credit cards. We always fall for such gimmicks and end up making a hard inquiry on our credit report which then hampers the cibil score.  These hard inquiries made by different lenders remains on your report for two years and when in future you genuinely apply for a loan, these may cause you problems. Credit inquiries accounts for 10% of your cibil score.

You can get your credit score a boost without even making inquiry. Only inquire when in need, do not fall for mouthwatering offers by lenders.

  • Piggyback

This is the easiest way of all. You can improve your cibil score by becoming an authorized user on someone else’s credit account, this is called piggy backing. If a family member like father, spouse has a good credit history, you can tag along with them becoming an authorized user for their account and this will boost your credit score. This is like an ultimate trick used by people to get their credit score up in no time without any efforts.

Just make sure the lead account holder makes all their payments on time and maintains a good credit health, or else this practice can also turn out to be dangerous as the lead with hampering their own can hamper your cibil score as well.

If managed correctly a credit score can do a lot of financial miracles in your life. Mantling a good cibil score is no rocket science, all it needs is good financial integrity which will help you in long financial runs.

Age Of Free Credit Score: True?

From January 2017, the Reserve Bank of India made it mandatory for all credit rating agencies to provide a credit report without any cost once a year when a request is made. This means the agencies have no obligation to provide a report themselves, thus if you need a report then you have to expressly make a request as per the guidelines laid down by the agency to get it. Well, does this guideline by the RBI actually translate into free credit score for all those who require?

How to Get Your Free Credit Score?

There are four credit agencies that provide credit reports for individuals in India and each has a different process for getting a credit report. Let us have a look how you can access your free credit score from each one of them:

  • Transunion CIBIL: If you want to get your free score from CIBIL you can do so by visiting the website where there is a link at the bottom of the home page for getting a free report. It’s a three step process, the applicant needs to fill a form where basic details need to be filled and then answer a few additional questions for authentication purpose. Post the details being verified the applicant can access his/her report.
  • Crif High Mark: They also have a link for getting the free score; it is on the left side bar of the home page. The first step is to fill in basic information, here the information required is more detailed, after filling the form the applicant chooses his/her order, then they authenticate themselves, after which they can download their report.
  • Equifax: If you follow the link that is displayed for getting a full free credit report you are directed to a set of guidelines where you are instructed to download an app for the same. The applicant will need to login to the app using a temporary PIN, authenticate themselves and login again after 24 hours. You are given four attempts to answer three questions related to your credit history; once you have completed all steps successfully you get the report on your phone. Those who do not have smart phones can get the report by sending a scanned copy of an identity proof and address proof along with the application form at the mentioned email id.
  • Experian: There is no separate link for a free credit report but once you click on the link for getting a report, it takes you to a form where you fill in details as required, get an OTP and then generate a password. After this, you can almost immediately access your report.

So is it Really the Age of Free Credit?

Yes, it is the age of free credit. Each organization has a different process, for some, it is slightly cumbersome and for others, it may be simple and quick. Irrespective of that fact, all rating agencies do provide a free credit report almost immediately or after some delay. If the process is followed the applicant can access their reports if they wish to do so.

Since there are four rating agencies, effectively one can get four credit reports in a year which makes one report each quarter. In case someone wants more reports than that (which is unlikely) then the option of getting it free might not be there.

So what does it mean for you?

Being updated about your credit health has many benefits. It allows you to spot any errors in the report and get them rectified if required, you can improve CIBIL Score by assessing the reason for it being low, and looking at report can also help you detect signs of any identity theft if it happens. Checking your report has many positives, now it costs nothing and it also does not lower your score.

So it’s up to all of you out there to make the best of the situation and stay credit healthy by checking your credit score regularly and that too without paying anything!

 

What Credit Scores Should I Avoid?

There are four credit rating agencies that score individuals on a score of 300 to 900, with 300 being the lowest and 900 being the highest. CIBIL being the first rating agency is almost synonymous with credit scoring in India.  The importance of credit scores has been growing over the years and so has an awareness to an extent, however, a lot still remains to be desired in the area of awareness about credit rating, their importance and what constitutes a good credit score. Here we try and explore the importance of credit score and what credit score should be avoided and for what reasons.

Importance of Credit Scores:

Unlike before when loans were sanctioned based on the referrals by account holders or the bank’s manager’s discretion now a more objective process is followed. This process involves the applicant meeting the eligibility criteria which also entails that the applicants have a basic credit score. Though lenders do not put it in their eligibility criteria a range or a number for the credit score, below which they will not accept a loan application but it is the first step in the application scrutiny process.

Each lender may have a different threshold for the credit score, below which they might not accept the loan application; it also varies as per the loan type and other factors too like the employment record and so on. The lenders might be more flexible if the applicant is employed with an organization with which the lender has a tie-up or in case of secured loans.

However, despite some variations that may occur in the acceptable level of the credit rating that maybe be acceptable for getting a loan, its importance in the loan application process is definite. So it is a good idea to access your free credit score from time to time and assess your credit health from time to time.

The Scores to be Avoided:

As we discussed in the first paragraph the scores can range from 300 to 900; most loans are sanctioned to those applicants who have a score equal to 700 or above 700. Thus ideally any score below that is avoidable but as we said loans are given based on many factors and credit score is one of the most important factors amongst all these aspects that influence the credit sanctioning process. A good credit score does not ensure that a loan will be sanctioned (in case documents are not complete or other eligibility criterion is not met) but a low score will definitely ensure that the application does not go beyond the first level of scrutiny. So what scores should be avoided:

Score between 700 and 750:        Acceptable

Any score between 700 and 750 is perfectly acceptable in most cases and almost all lenders will be willing to extend the loan to the applicant. However, if it is an unsecured loan of big ticket size then the lender might want to take some extra steps to establish the suitability of the applicant.

Score between 550 and 700:        Avoidable

This is a score that is definitely avoidable as it reflects irresponsible credit behavior. Lenders will be willing to lend to an applicant with this score only after taking some steps depending on how low the score is. Lenders may seek a guarantee or collateral or may lend at a higher interest rate. Working in an organization that has a tie-up with the lender may help in getting the loan sanctioned. In such a scenario if will be better if the applicant tries to increase CIBIL score before applying for any loan.

Score between 300 and 550:        Highly Avoidable

Needless to say, this is a position that no one wants to be in. With such a score it is almost impossible to get a loan from the organized lending sector. This indicates very irregular repayment history and maybe loans have been written off and so on. If one has this kind of score then it makes no sense for them to even think of getting a fresh loan, they should focus on first on improving their credit health.

Avoid any score below 700 as it is not about getting a loan sanctioned but it is also reflective of the overall credit health of a person.

 

How Will Mistakes Be Removed From Credit Report

One day, you plan to take a look at the most talked upon topic amongst your peers. The Credit Report. This is the first time you are looking for this report as some one told you that it is advisable to have a cibil score of 750 points to get better interest rates on loans and easier disbursal of it. You research a few website and you come to know that you can get a free credit report once a year. That adds a Smile on your face, as what you heard about the reports being expensive to fetch, the myth broke!

Now, while the process of applying for a free credit report, there are a lot of thoughts coming to your mind. What will be your score? How will it help you in getting better loans? What if your score is not good? What if you are in loan defaulters list? What if there is no score? Take a break! Know the basics of credit score. How is credit score calculated, various parameters of the score, what can take the score down, what are the mistakes one should not make, how to remove mistakes if already done?

Let us first know the Mistakes that can be reflected in Credit Report :

  1. Errors or the Report
  2. Things that lower the score
  3. Parameters on Which the score is calculated

Errors On The Report :

There are Major and minor errors which reflect on your report. To list a few; we have When the account you have asked to look into, is not your account, or PAN card is not updated properly, the account status is falsely updated, or there are ownership issues with the account, salary or date of birth or address is not updated or wrongly updated.

While you fetch the report, always check if your details updated are correct or not. If any issue, do follow the concerned department of the credit bureau and get them rectified.

Things that lower the score :

  • At times, a person does not pay the credit card bill, or he does not pay a few EMIs of his loan, and the interest keeps on building. At these time, to complete or close an account, the bank offers a lumpsum amount to the customer. While the customer pays this settlement amount, the loan/credit card outstanding vanishes, but it affects the score. If you are in one of the above mentioned conditions, try to completely pay the balance and not the settlement amount.
  • If due to some mishappenings in your financial conditions, you and the bank/NBFC agrees upon a loan tenure or EMI structure to be altered, you feel happy about it, but do not put the blush on too much as this also affects your score.
  • If because of any reason, the lender has filed a case on you, or u have put off your hands on payments, would also lower your score.
  • Bankruptcy also is a huge black spot on the credit score and requires almost a decade to get it off from your credit report.

Parameters On Which Score Is Calculated :

This is to be taken care of the most, so that you do not make any mistakes or if they are done, you rectify them!

  • How are payments done in past? If you have made payments on time, or if the are delayed. If they are delayed, then what was the reason for the delay and how long was the payment delayed, this is one of the parameters on how the score is calculated.
  • When a loan is taken or a credit card is applied, the payment methods are specific. Some have fixed payment module and few have a revolving payment module. For a good credit score, you should have both!
  • The total age of your account (loan or card) is a huge benefit on the score. Older the account and clear are the payments, Better is the credit score.
  • If, in any case, you apply for too many new credit cards or loans, that is taken as credit hungry behavior, and can take your credit score tremendously low!
  • If you have many accounts which are not paid on time, make sure you start paying them as soon as possible, else it will also wreck your score.
  • Debt to income and income to expense ratios generally checked by the lenders while giving a loan to the customer.

The above given information is on how and what to check and do to increase the score or maintain the current one. Also, there are different places where its mentioned how not to fall in a trap to avoid the dip in your score. However, If there is any place you have missed which might take your score down, do not worry! Have patience, and work on them. If you are unable to understand, consult a credit counselor and take the help! Remember “A Wise Person Is The One Who Takes Help When It’s Most Required”. So, do not feel ashamed, to ask for help in rectifying the mistakes which you want to get removed from your credit score.

How Important Is One’s Credit Score?

Indian loan market has seen a rapid growth in recent years. Gone are the days, when people used to take loans only in times of financial crisis. Declining interest rates and flexibility to repay have made loans an attractive option to fulfil one’s needs today and repay the amount in equal monthly instalments. With this trend, credit scores and credit reports have also gained importance. People are waking up to the fact that scores affect many aspects of their financial life. So many people who have a low CIBIL score are now taking steps to improve and maintain it. They check their free credit score from all the three credit bureaus to keep track of their credit health. But is CIBIL score only a matter of concern to people looking for loan approvals. No, the importance of score goes much beyond that. But before we delve into that lets understand what a credit score is.

Three credit bureaus in India CIBIL, Equifax and Experian compile financial data shared by the member banks and other lending institutes relating to the credit taken by each individual. These bureaus prepare a credit report for each individual, which basically reflects your credit card and other loans repayment history. Based on your credit card usage and repayment track record the bureaus calculate a credit score. The way your marks had determined your level of knowledge in school, in the same way, the credit score determines the risk factor associated with a borrower.

Here are some places where your credit score will be evaluated

Loan approvals- Checking your credit score is one of the first things that lenders do to evaluate whether you are worthy of giving a loan. A high score helps in gaining lender’s trust and assures you of easy approvals. A low CIBIL score indicates that you haven’t dealt with your past debt obligations responsibly, hence lenders feel wary of lending you money. Even credit card approvals and credit limits get affected by your score. Hence a good score comes in handy in obtaining any kind of financial assistance.

Interest rate- An excellent CIBIL score not only helps in getting loan approvals, it also helps in bargaining for a better rate of interest. Lenders are ready to cut down on interest rates if the past records show that you are a diligent and responsible borrower. A low score costs you a lot, as banks charge a high interest rate to cover the risk that they are taking by lending you money. Hence your monthly interest outgo is directly impacted by your credit score.

Employment- Unheard of a few years ago, it is now increasingly becoming a common practice to check the CIBIL score of prospective employees. Credit checks are now an integral part of the hiring process  for jobs in the finance sector, or positions which require a person to handle company’s money. It is basically done to ascertain whether you are responsible in handling money. So if you are looking for a job, check your free credit score to see that your credit profile is in good shape.

Insurance premiums- Whether you are buying a home insurance or a car insurance your score will play an important role in determining the insurance premium that you pay on it. A low score can cost you thousands of rupees more than someone who has an excellent rating.

Renting property- Your CIBIL score can influence the rental opportunities that you have, as many landlords too check your score before letting you out their property. A landlord may not want to take the risk of not getting paid by renting his property to a person with a low CIBIL score. They want to be sure that they get their rent on time, so they prefer renting to a person with good credit who has shown responsible behaviour in the past.

You can order your free credit score from any of the bureaus once every year to monitor your credit situation. An excellent credit rating is anything higher than 750, but even if your score is between the range of 700-750, you can easily qualify for loans and bargain for low interest rates. A score less than 600 is considered as a low CIBIL score. If you fall into this category don’t lose heart. You can still get your financial life back on track if you take conscious efforts and work towards improving CIBIL score.

How is my Credit Score Determined?

A credit score plays an important role when you apply for a loan or any line of credit. It’s a three digit number which is used by the banks or lenders to evaluate whether or not they should sanction your loan. It is important to understand what your credit score is before applying for a loan, so that you have an upper hand in loan negotiations i.e. interest rates, processing fees etc.

Imagine you have applied for a loan and your loan gets rejected. You have been told to apply for a loan after you build a good credit score. Many questions will cross your mind like, what is my credit score?  How to check cibil score? How do I improve it? Now this is the tricky part! A credit score is a compilation of a lot of factors associated with your financial things.

Today we will set sight on how a credit score is determined,

Payment History

The most important factor which contributes to your cibil score is your payment history. It accounts for 35% of your score. It is a compilation of factors like : your account information, any default payments, how long the default payments are carried forward, if you have filed for any bankruptcy in the past, etc. If you would like to see a good hike on your cibil score, you should make regular payments to the lenders and make sure you do not have any default payments.

Your balance payments

The credit bureaus have each and every financial detail of yours. They monitor your financial activities on regular basis. Your credit score also gets influenced by the amounts owed by you to the banks or lenders. For example, you have a credit card and its limit is around 1 lakh rupees, imagine you have spent a fortune on the same and when the due date arrived, you converted a lot of transactions into EMIs. This way you have blocked your limit at the same time you owe a lot of money to the bank and the same is reported to the bureaus. It contributes a whopping 30% to your cibil score! It’s better to spend less rather than spending more and facing financial instabilities

Length of Credit

Building a good cibil score is a lengthy process and you need to start somewhere or the other. Once you have applied for a loan or any other financial product like a credit card your transactions start getting recorded with the bureaus. Various accounts have different accountability to your score. For example, if you applied for a home loan, the loan account will be active for at least 15 years. On the other hand a car loan lasts maximum for 5 years. Let’s take a credit card for example. It does not have an account expiry date and you can use the same, until the time you don’t want to close it. It contributes 15% to your credit score. In any case, do not close your credit card account, as that will influence your score under payment history section.

Number of inquiries

We understand there are a lot of financial products available in the market. Some of them so mouthwatering, you would definitely like to get it. Did you happen to know, for each financial product inquiry; your cibil score is being checked? The more inquiry you make with the bureau, the more your chances are to get your cibil score down. As there are a lot of products in the market, only go for the product which is tailored to your need and try making fewer inquiries with the credit bureaus.

Types of Credit Used

There are various credit accounts with which you can be associated with. The cibil score is also determined with the types of credit accounts you hold like, loan accounts, credit cards, etc.

This is just tip of the iceberg as far as credit score goes. It is important to know all these factors and how they contribute to your cibil score. But what’s more important is how you are managing your finances. The more you are financially responsible, the more you have chances of getting a loan without any hassles.

4 Different Credit-Scores You Should Know About

The first rating agency in India was established in the year 2000, which makes the history of credit health assessment in India less than two decades old. Since then three more credit rating agencies have been set up in India; thus now there are four different agencies then rate individuals based on their credit behavior and credit history. Although while the basic tenets of rating remain same, there might be few differences in their scoring model and also some other aspects. When you seek a loan, the prospective lender can seek the credit report from any of these four agencies. Thus it is important that one knows the basics that pertain to these different scores that one may have.

What’s in a Name?

The lender can seek the credit report from any of the four rating agencies to judge the credit health of the applicant and scores from all of these are valid. The rating by all agencies is done based on five factors that includes : the repayment history for paying credit card dues and EMIs, hard inquiries made by lenders, credit utilization, credit mix and the length of the credit history. The information supplied to all the agencies by banks and FIs are also same. However, there still might be a minor difference between the scores of all the four agencies due to the weightage that might be given to each parameter which may cause a variation of 5 to 10 points between scores of two different agencies but not more than that.

However, if you follow the basic tenets of being a responsible borrower then you will have a healthy score across agencies and if you want to increase credit score be sure to check what is included in the score calculation. When lenders seek a report from any of these agencies they are aware of the difference in the rating models of each of them and they will keep this in mind when evaluating the CIR of the customer.

As per the RBI guideline, all rating agencies have to provide a free report once a year to all customers who ask for it. The cost of getting the reports (mentioned below) is if you need another report after getting your free one in the same year.

  • TransUnion CIBIL Ltd:

It’s only fair that the first credit rating agency we talk about is TransUnion CIBIL. CIBIL was set up in the year 2000 and was given a license by RBI in the year 2009. TransUnion acquired an 82% stake in CIBIL in 2016 and hence it is now known as TransUnion CIBIL.  The score ranges from 300 to 900.  You can get a report and score by paying Rs. 550; you also could opt to take the option twice or four times in a year or just get the report for Rs. 159. Report is sent in 7 to 10 days; if online verification is successful then you can do a CIBIL score check through email too.

  • Experian Credit Information Co. of India Pvt. Ltd

This rating agency was set up in the year 2006 and was given a license by RBI in the year 2010. The rating agency had a different range of scoring but now they also score in the range of 300 to 900. The report can be sought by paying Rs 138 or the report and score both can be bought online by paying Rs. 399. If you send the request online you can receive the report immediately via email, an offline request may take up to 20 days.

  • Equifax Credit Information Services Private Limited

This agency received its license in 2010 and it also scores between 300 and 900. Basic report and credit score can be obtained by paying Rs. 138 and Rs. 400. Reports are sent within 7 to 10 days of the request being sent.

  • CRIF High Mark Credit Information Services Pvt. Ltd

High Mark was established in 2007 and received the license from RBI in 2010.  High Mark also had a different scoring pattern earlier but now just like the other three agencies above their scores also range from 300 to 900. You can get the report and the score by paying Rs. 399.

All the agencies have a defined and well laid out dispute resolution mechanism. So if you find out there is a difference of 50 points or more between score by two agencies be sure to find out the reason for this discrepancy.

3 Credit Myths that can destroy your score

Credit history affects various financial aspects of our life. It is crucial to understand what credit score and reports are, how the score is determined and how one can maintain a good score. There is a lot of information available to guide you to towards a perfect credit score. But do not believe everything that you hear. There are many credit myths that are also doing the rounds. One wrong step can lead you in a wrong direction. Do not get misled by such myths that can actually tank your score.

 

Here are some misconceptions that can harm your credit score. Beware of them and get to know the real facts.

 

Myth 1 : Closing credit cards will improve credit score

 

Some people believe that having a number of credit cards has a negative effect on the credit score. They believe that closing some old unused credit cards will help in raising the score. But this isn’t the way credit score works. One of the major factors that determine your score is the credit utilization ratio. It is the amount of credit you use compared to the total available credit limit. For a good CIBIL score you should have high credit limits and you should use not more than 30% of it. Closing credit cards will reduce your total available credit limit and increase your utilization ratio. This will drastically reduce your score. Closing old credit cards also affects the “length of your credit history” factor that impacts  one’s credit score. It reduces the average age of accounts and hence brings down the score. So if you really need to close some cards, close the newer ones. Another option is to close cards with a lower credit limit. Do a CIBIL score check to ensure that the impact of closing the account isn’t too drastic. Also, note that some credit card companies cancel the card if it is inactive for a long period. So charge small expenses to keep the card active.

 

Another misconception regarding closing credit cards is that if you close a card with a bad credit history, the information gets erased from the credit report and your credit score improves. The reality is that you cannot erase  credit card’s history recorded by the bureaus in your credit report just by closing the credit card.

 

Myth 2: Not using credit cards is good for CIBIL score

 

You will see many tips on improving CIBIL score that advises people to pay off all their outstanding balances and stop using their credit cards. They proclaim that going on all cash basis and staying out of debt will help improve your score. But infact such a decision can be destructive for your score. In order to have a good CIBIL score, one needs to show how well one is capable of managing revolving accounts. For this one needs to keep the credit cards active by charging expenses and then paying them off every month. Even if you have a mortgage or any other instalment loan where you are making payments diligently you will not have that perfect score if you do not use credit cards. That’s because the CIBIL score calculation also takes into account the credit mix. A person who displays responsible behaviour in using both types of accounts will have a better score.

 

Myth 3 : You need to carry a balance on the credit card to raise your score

Using the credit card is necessary to build the credit score, but carrying a balance is not. You can work towards a good score if you pay off the entire amount when the bill arrives. By carrying a balance you will have to pay a high interest rate on the outstanding amount. This isn’t required at all to show that you can handle credit responsibly. In fact, paying off the entire bill amount will help in keeping the utilization levels low which is good for your score.

 

Hope this article cleared up the mystery that surrounds the CIBIL score. You will now have a better understanding of how the CIBIL score calculation works, and what you should and should not do to ensure a good score. But what if your score already took a hit because of these myths that you carried in your mind for long? Not to worry! If you are in need of funds you can avail for loans for low CIBIL score offered by many private lenders in the market.