If you are apprehensive about checking your Credit Score for fear of reducing it, relax! It won’t cost you a rupee. In fact, you are eligible to receive one free credit report a year from each credit bureau in India – CIBIL, Experian, Equifax and HighMark.
However, if you think that the only time you need to check your Credit Score is when applying for a loan or Credit Card, think again! Having a 750+ Credit Score is one of the surest ways to boost your eligibility when applying for feature-loaded Credit Cards or Personal Loans.
There is a misconception among people that checking your Credit Score yourself will cause it to drop. That couldn’t be further from the truth. Checking your Credit Score yourself counts as a soft enquiry and does not lower your score in any way. So knock yourself out!
However, when you apply for credit and the lender checks your score, it counts as a hard enquiry and results in a slight drop in your score. But don’t you worry. Avoid applying too many times for credit over a short span and you’ll be sorted. Also, paying your dues in time will make sure your score shoots up in no time.
Now let’s look at the 6 obvious benefits of checking your Credit Score regularly.
Know Your Financial Standing
Just like regular medical check-ups are necessary to keep your health in order, regularly checking your Credit Score is important for your financial well-being.
If you have a good Credit Score, staying on top of it will ensure that you follow the right financial practices, such as paying your Credit Card bills and loan EMIs on time, to maintain it. If your score is low, it’s even more important that you keep an eye on it and take remedial measures.
If you have a score of above 800 then know that you will be a darling to banks and lenders.
Ensure That Your Credit Score Is Always In The Green To Keep You From Seeing Red
A Credit Score of 750 and above increases your chances of getting a loan or Credit Card. However, maintaining a good Credit Score requires financial discipline and patience.
Keeping a constant check on your Credit Score is one way to ensure that it isn’t sneaking towards the red zone. A fallen Credit Score will take months of penny-pinching and hard work to rise up again. This could be problematic if you happen to require a loan or a Credit Card during a financial crisis. Keep an eye on your Credit Score and you’ll be able to stem any decline immediately.
If your score is already in the flourishing 700 range, you can take steps to elevate it to the 800 bracket. In short, checking your Credit Score every now and then will give you a fairly accurate representation of how you are managing your finances and line of credit.
Keep Your Credit Report Error-free
Your Credit Score is a three digit number, which, in essence, is a numerical summary of all the details in your credit report. Any error in your report can wreak havoc on your score. Anything from a spelling mistake to a wrong entry about your debt repayments can lower your score. Checking your score regularly is the best way to avoid such mistakes from killing your score.
If you spot an error in your report, notify the credit bureau and the bank concerned immediately. Back your claim with as many documents as you can. If your claim is legitimate, you can rest assured that the required changes will be made and your score will bounce back to what it should be.
Stay In Control Of Your Loan Or Credit Card Application
Most people commit the mistake of checking their Credit Score after submitting their application. Nothing wrong with that, but it serves no real purpose.
On the other hand, checking your score before submitting your application is an effective way to ensure the approval of your application. If your score is good, all your documents are in order and the application form is filled correctly, you will most likely get your loan or Credit Card application approved without any hassle.
If you find your score is lagging, wait until you fix your score before submitting your application. Even if your income is on the higher side, banks will still look at your Credit Score before taking a decision.
Your Credit Score is an indicator of your repayment capacity. Banks would rather give credit to a person with a fantastic repayment track record than someone who has a good salary but a poor repayment history.
Get Useful Insights About Your Credit Score
Want to understand how your Credit Score works? Just look at your credit report. It holds all the secrets to your Credit Score. It will showcase various parameters that influence your score.
Each parameter contributes differently to your score. Studying these parameters will tell you exactly what’s going right and what isn’t. By analysing your score, you can focus on areas that are pulling your score down rather than on the ones that have a positive effect on your score.
Know Whether You Deserve A Better Card Or Loan
You might have your eye on a certain Credit Card or loan, but what if your Credit Score tells you that you deserve something better? That’s why we insist you check your Credit Score regularly. For example, a high-end Credit Card means better rewards and benefits.
BankBazaar.com is India’s leading online marketplace for loans and credit cards.