A majority of people do not consider checking their credit score except when they are applying for a loan. Some people avoid checking their credit score because they are afraid to know their position. There are also others who ignore the idea of a credit score altogether because they are unaware of the features and benefits of having a high credit score. Some people even think that checking credit scores can impact your credit line.
However, this is not the case. A credit score is a three-digit number that rates your credit repayment efficiency using your past loan records, EMIs, and repayment history. Therefore, checking your credit score and slowly building it is critical for maintaining high creditworthiness. Let us discuss the importance of checking your credit score regularly and how it can help you in taking loans efficiently.
Why Should you Check your Credit Score from Time to Time?
Here are some of the reasons why you should check your credit score regularly.
It Helps you Understand your Credit Position
In a way, a credit score is a modern scale of determining your financial health. Therefore, it is essential to check your credit score, even if you are afraid that you may have a low score. Checking your credit score gives you an idea of where you financially stand. Don’t worry if you have a bad credit score, as good credit practices can boost your credit score in no time.
It Helps you Maintain or Improve your Credit Score
If you want to apply for a loan in India, then your credit score is considered very important as it is the very first thing that is verified before getting a loan. Majorly, the credit score is tracked by CIBIL in India, making it the most widely accepted credit score. While your salary is not cited anywhere in the credit score result, it is one of the factors that are used while calculating your score.
Additionally, Acibil score range between 700 to 900 is considered excellent and enables you to avail almost every loan scheme available in the market. Building a credit score takes months and checking and analysing your credit score in depth can give you the time to plan and build an excellent CIBIL score.
It Helps you Keep a Check on Inaccuracies
In several credit reports, the credit score system can create inconsistencies and mathematical errors. Repayment details and past loan records can also not show up in the final credit score report. Checking your credit score in due time can help you resolve tracking problems so that the credit score report will be updated will all the correct information. Sending the glitch details to the credit institutions will also help you get the right results.
It Helps you Predict your Loan Application Status
Predicting the result of your loan application is impossible if you have no idea about what your credit score is. Knowing about your credit score lets you plan ahead. For example, if you have a good cibil score range, you don’t have to worry about your application being rejected. Similarly, having a low credit score enables you to create backup plans in case your application does not go through.
It Helps you React to Changes Quickly
Keeping track of your credit score can give you useful insights that enable you to react to market changes quickly. If your credit score has decreased, you can seek information about what caused that. Alternatively, if you manage to stand in the good cibil score range, you can pursue the loan that you are interested in. Taking small personal loans and repaying them within the due date can help boost your credit rating seamlessly.
It Helps you Avail Better Loans
The more your credit score grows, the better loan plans will you be able to access. So knowing about your credit score beforehand can be useful in striking a loan agreement with lenders. Checking your credit score also gives you a vision of when can you avail better loan plans or a credit card with much better terms and conditions. Moreover, maintaining a good cibil score range increases your trustworthiness, with lenders giving you access to premium loan schemes.
How to Check the CIBIL score
Here are the steps that tell you how to check free cibil score:
Step 1: Go to the CIBIL website at www.cibil.com.
Step 2: Choose “generate your CIBIL score” from the options on the page.
Step 3: Provide all the necessary personal information like name, address, email, and registered ID.
Step 4: An OTP will be sent to the registered number. Enter it and click on continue.
Step 5: Now login with your details and your CIBIL dashboard will open. It will show you all the details regarding your credit score.
To sum up, credit scores can help you get a better understanding of your financial standing by providing a numerical score based on your past patterns of credit loans and repayment. Regularly checking and analysing your credit score can help you understand the concerning factors that can catch a moneylender’s eye, and you can take precautionary steps to rectify them.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.