Most people probably don’t consider checking their credit score unless they are applying for a loan. However, few even avoid checking their credit scores because they’re afraid to know their score, and some ignore this because they are unaware of the importance of credit score on their financial life. Apart from this, some even have a misconception that checking their credit score will affect their credit. But don’t you worry, we are here to clear all your doubts and tell you the importance of checking your credit score regularly.
Reasons to Check your Credit Score:
- Know where you stand: Your credit score denotes your financial health, and ignoring your credit score can have several impacts on your future finances. Whether it’s good or bad, it is always suggested to check your credit score once in six months so that you can have an idea of your financial standing. However, even if your score is bad, there are certain steps following which can improve your credit score.
- Keep your credit in good shape: If you are applying for a loan, you can’t get your credit score up-to-the-mark over a few days. The fact is – your credit score takes months to build up and get reflected. And monitoring your credit score gives you the control of maintaining it.
- Make sure your credit information is accurate: Your credit score is the numeric reflection of your credit history reported by your lender. And checking your credit score regularly gives you a chance to rectify the wrong reporting by your lender (if any). So, if your credit score is lower than what you expect you need to go through the report as your credit report can contain errors that need to be disputed with the credit bureaus. In case you find a mistake you can directly write to the credit bureau or you can also ask your lender to provide the correct details to the bureau.
- Predictability of your loan application: If you are unaware of your credit score before putting in an application, you cannot predict the outcome. However, knowing where your credit prepares you for the possible outcomes— such as when your credit score is 700 or above you can easily predict that your loan application is going to get approved and when it is low you can predict that there are probably fewer chances of approval.
- Knowing your credit score can empower you: The higher your credit score is the better is the interest rate for your loan. So, when you check your credit scores regularly, it empowers you to negotiate with the lender and get the best rate for your loan.
- Respond to changes quickly: Checking your credit score regularly can help you take the necessary steps much sooner. If you see your credit score is low, you can use the information in your credit report to figure out what might have caused the change. And hence can take steps accordingly to correct your credit score. In general making, timely payments for your ongoing loans improve your credit score in some time. However, if you are planning for a big-ticket loan and your credit score is not good, then you can take a small amount of personal loan and repay it fast so that there is a good reflection of it in your credit score.
- Know When You Can Avail Better Credit Card and Loan Offers: Checking your credit score regularly also makes you aware of when you are more likely to access a loan or credit card at better terms. A high credit score increases your credit-worthiness and gives you access to additional credit on better terms such as a lower interest rate for your personal loan or a higher limit credit card.
Apart from all these, another great advantage of checking your credit report is that – it notifies you about the changes in your credit score, at the same time any mistakes or wrong updates can be rectified and necessary actions can be taken to correct them so that it does not affect your future credibility.