Why Should I Check My Credit Score?

While dreaming big, on buying things, it all revolves around how much money do you have. Nothing is for free! Whether you are planning for a house or a bike or a vacation or gold or the property, things are expensive. On a larger picture of say 10-15 years down the line, you see yourself achieving the dreams of properties or asset you want to acquire. But what if you want them now? The answer to this now is credit. Credits are available these days on an easy base compared to how they were earlier. The credits or the loans are a nice way of living your life now compared to how you had decided a few years down the line. Its not something that is offered to you for free. But it’s the plain logic of getting the amount of money in advance where you will repay it later with the interest on the amount. But in all, it’s a help which is to be got from banks or NBFCs or Private Lenders. It’s also safe to get it from a trusted party in order to get away from any chaotic situations later if you have borrowed the money from your friends or relatives.

How can one get these credits or the loans? With the standard procedures, you go to the bank, ask for the loan and know the details. The bankers would want to know the type of loan you want, amount of loan required and the tenure for the same. Once they get this detail, your credit score is checked. According to that, the loan amount is sanctioned and rate of interest is decided. Now banks can get the credit score when an applicant comes to them for taking a loan. But, is there any requirement for you to know the score?

Yes, it is really important for one to know the credit score. There are many reasons why you should know the credit score and check it periodically. Let’s look at them turn by turn.

  1. To stay credit healthy

                 We always take care of our physical health or financial health or emotional/mental health. But what is credit health? Credit health is a much talked upon topic these days. By the word credit health, means your credit report should be good. Your credit score should be 750 or plus. It takes efforts to stay credit healthy. You need to make proper payment on time of the credits you have taken from banks via loans or credit cards. You need to think and use the credit you have received else you can get into loan defaulters list. This is not much of a task, is it?

By checking your credit score regularly, you will come to know if your score is the same, or it has gone down or it has been increased. A regular watch will be an add on to the work you are doing in maintaining the credit health.

  1. To check if everything is in place on the credit report

                 If you have applied for a credit card, and it gets rejected saying your credit score is low. How would you deal with the situation? When you had checked the score last time, it was good enough and hence after taking a lot of time to think, you applied for the credit card. But what happened? It is advisable to check your credit score every 6 months. There can be a possibility if some one has stolen your identity, i.e. its an identity theft case wherein your details are used by someone to take loan and you are completely unaware about it. Or there are some mistakes in your report and you are clueless as you have not made those payments. So, in that case, you need to raise a dispute.

In any of the case, if your score is not reflecting how you had thought it should be, you have to check the score.

  1. Keeping an eye

Either you are new to the credit score or you are trying to repair the credit score, in either the case it is important to check the credit report regularly. RBI has passed a rule of giving 1 free credit report per year to any individual to all the bureaus. Make the use of such advantage and keep an eye on the score.

In any of the cases, to stay updated is best. If you are going through a new built or repair, regular checks are important. Don’t be lazy in such things and stay credit healthy!

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Are you really credit aware

In this day and age most people have become dependent on credit. Owning a home, car, funding a wedding etc. have become much easier thanks to the various credit facilities extended by financial institutions. However, despite the rising popularity of credit, many still do not know about the function of the credit bureau and have limited understanding about their credit reports. Being credit aware is important as it can help you with bad credit fix, enhance credit score etc. that in turn eases your financial journey. In this article, we will look at what one means by CIBIL report and credit score as well their importance.

 

To borrow money from financial institutions, your credit report and score plays a big role. The credit rating is assigned to you by the credit bureau. TransUnion CIBIL Limited is the country’s first Credit Information Company. Popularly known as CIBIL, the institution holds the records one’s payments in relation to loans and credit cards. Credit Information Report and the CIBIL TransUnion Score, the two CIBIL products, have brought drastic changes in the way credit is handled by financial institutions and customers.

 

A credit score, generally referred to as CIBIL score, is a three-digit number that reflects your creditworthiness. The number is determined based on the elements found in the credit report. Financial institutions look at your CIBIL score to estimate whether you will be able to repay back the loan amount on time. The credit bureau uses advanced analytics for calculating the score and then assigns the individual a number between 300 and 900. The closer the score is to 900 the better. It is important to enhance credit score, if your digits are below 750. The first and the foremost way to enhance credit score is by ensuring all payments are made on time. Multiple payment defaults can bring down your score. Lowering your credit utilization rate is another means to enhance credit score. Also, it helps to maintain a healthy credit mix; do not hold too many unsecured loans. Putting into practice different measures to enhance credit score is mandatory for all as it will help you avail credit easily and at low rates of interest.

 

If want to check your score, you would need to visit the official website of CIBIL and fill in the online score request form. You would then have to fill in the kind of subscription you require and your personal details such as email address, date of birth, gender and PAN number. After entering the required details, the site will direct you to the payment page. When the payment is done, you would have to submit authentication details, and once this step is successful, you will receive your score in a matter of some hours via email.

 

A credit report contains details about your credit history. Financial institution run a credit inquiry i.e. make a request to check your credit report before extending credit. The report is useful in identifying your true financial standing. Some of the information that can be found in your credit report include – defaults on loans (if any), number of inquiries made by banks and other financial institutions, types of credit used, payment history etc. Checking your CIBIL report at least two or three times is required as it helps you stay aware of your financial position. In case you spot any errors, you can raise a CIBIL dispute which in turn will ensure bad credit fix. Undertaking bad credit fix by getting errors in the report rectified is also a means to enhance credit score. Hence to make sure that no errors have crept in or your accounts are being misused, it is important to check your credit report at regular intervals. In case it occurs, raise a dispute with the bureau who then will undertake bad credit fix.

 

It is not just the banks that have an interest in your credit score and report. The other parties that can show interest in your credit history include employers (to making hiring decisions), landlords (to determine your ability to pay rent) and sometimes even by insurance companies (to decide on the premium). Now since multiple parties can look at your score, it becomes essential to undertake bad credit fix in case you have a weak score. If your credit utilization rate is high then one way to conduct bad credit fix is by getting a higher credit limit and spending less. If a particular line of credit is hurting your score then focus on getting rid of it by paying it off sooner. Striving to enhance credit score is necessary as it creates a positive image in the minds of the financial institutions. Remember, the closer the three-digit figure is to 900 the easier your financial journey will be.