Your credit score provides vital information that represents your overall financial wellbeing. Viewing your credit score and credit history may help you understand your current credit position.
Keeping a check on your credit score not only keeps you updated about your financial health but also gives you sufficient time to take corrective measures and rectify the errors if any.
Credit Score
A credit score is a three-digit numeric representation of your credit history. Basically, it contains all the records of your borrowings, payments made towards your borrowings/loans and bill payments. This record includes all your current and past credit accounts.
This makes lenders check for the credit score and credit history before they approve any loan application. Lenders also do analyse the repayment capacity of a loan applicant by checking their credit score. Hence, reducing the risk factor for any of the credit card providers, mortgage lenders and personal loan or home loan lenders. Thus, making your credit scores and credit history the decision-maker for your loan approval.
This makes it important to regularly check both your credit scores and your credit history. This is also important because your credit scores are among the factors that help lenders to determine your loan interest rate.
Now let’s look at the 6 obvious benefits of checking your Credit Score regularly
Knowing where you stand financially
Same as how regular medical check-ups keep you updated for physical wellbeing, checking your Credit Score over the time keeps you updated regarding your financial well-being.
Having a Credit Score of 750 and above is considered as good CIBIL and it indicates:
You are following the right financial practices.
You are creditworthy
You pay your Credit Card bills and loan EMIs on time.
Visa a versa of a good credit score is having a credit score of below 750 or 700, this is considered as a low credit score and indicates: that you are not financially fit to be lend and trusted by the lenders.
Keeping a check on your credit score will help to take remedial measures at the right time.
Keep your credit report error-free
Even a minor error in your report can affect your CIBIL score to great extent. There can be several errors from a spelling mistake to a wrong entry about your debt repayments or your loan closure still not entered. All this may sound minor or small mistakes but can lower your overall credit score so much. So, how will you get to know that your credit score contains an error? and will you rectify them?
Well, checking your credit score regularly is the answer to all your questions.
Check your score twice or thrice a year, in case you find an error, notify the credit bureau and the concerned bank immediately. Attach required documents to acknowledge them and Back your claim.
Identify unknown hard inquiries
Whenever you apply for a loan, lenders pull your credit report from the credit bureaus to know your creditworthiness. When such inquiries are done repeatedly can be considered as hard inquiries, which can lower your credit score. In case your credit score has gone through such inquiries and has reduced your CIBIL you can reach out to the credit bureau and get it rectified.
However, submitting multiple loan applications within a short period of time can do this. Hence, avoid submitting applications to multiple lenders. And to rectify for errors and hard inquiries check your CIBIL score. You can also check your credit score for free from the online portals of lenders and fintech companies who provide loans online.
To Be Prepared for the Possible Outcome
If you know your credit score and apply for a loan, it’s more obvious that you know the results of whether your loan application will be approved or not. Apart from the approval, the interest rate charged for your loan also depends on your credit score, hence knowing your credit score also empowers you to be prepared for the interest rate offered.
Knowing that you have a higher credit score again empowers you to negotiate with the lender for better interest rates and deals.
While checking your credit score make sure your bank and lenders are accurately and completely reporting your payment history to the credit bureau.
Whether you are planning to take a home loan, a car knowing your credit score always helps you. Even if it is just staying up to date on your finances, or being ever ready for a personal loan checking your credit reports can help you to be prepared and take the next step.
