6 Reasons Why You Should Check Your Credit Score

What is Credit Score?

Credit score is a three digit number which depicts your credit worthiness. Credit score is checked by most lenders when you apply for a loan. Credit score is a three digit number in the range of 300 to 900. Credit score is one of the most important factors that lenders consider while processing your loan application.

Credit score is mainly based on repayment history. If you have availed loans from authorized lenders any time over the last 7 years, then you would have a credit score. Individuals with no credit history will not have a credit score. If you have regularly repaid your loans, then you will have a good credit score. If you have a history of missed payments, loan defaults and write offs then your credit score would be low.

RBI has authorized CIBIL, Experian, Equifax and High Mark to provide credit score. All authorized lenders are mandated to share all credit related transactions with the four credit rating agencies for the purpose of credit score calculation.

Credit scores of 700 and above are considered good and lenders would generally process loan applications of these individuals faster. Individuals having a credit score of 800 and above are offered collateral free loans. Lenders would straightaway reject loan applications of those individuals with credit score lesser than 500, unless they furnish collateral.

Knowing the importance of credit score, it is only wise to check it often. If you find any discrepancies in your credit score and report, then you have to immediately contact the credit score provider. If not, your loan application would be dealt a huge blow. 

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SEE ALSO: Credit Score India

Why Check Credit Score?

6 Reasons Why You Should Check Your Credit Score

1. You Were Denied Credit: Imagine this, you apply for a loan and your loan application gets rejected even though you have furnished all the requisite documents. You would be in utter shock to find out that your loan application is rejected. In this scenario, you will have to check your credit score. There are instances of loans being wrongly tagged up against your name due to errors from the banks and credit bureaus. You will have to get in touch with the credit bureau and request them to remove the wrong details.
2. Plan to Apply for a Loan: If you are planning to apply for a loan, then it’s good to check your credit score. This is extremely important especially when you are planning to avail long term loans like home loans. If your credit score is low, then you can work on it to enhance credit score. Having low credit score might result in the rejection of your loan application. It’s always good to check your credit score before applying for any kind of loan.   
3. Check for Identity Theft: By checking your credit score, you can keep identity theft at bay. There are fraudsters who make use of your credentials like PAN and so on to avail loans in your name. They take loans in your name and you would be held responsible for repayment. As you are not aware of what has happened, your credit score would take a beating, until you report the identity theft.  
4. Cosigned a Loan: If you have cosigned a loan or stood guarantor, then your credit score too is impacted. If the main applicant who is responsible for repayment defers payment, then your credit is impacted. So, just to make sure, it’s good to check your credit score often, when you have stood as a guarantor for the loan.
5. Plan to Improve and Get Accurate Credit score: If you want to improve your credit score, then it’s good to track it often. By regularly checking your credit score, you would know where you stand and can start putting in the efforts to reach a specified credit score in order to be eligible to receive loans.
6. Late Payment: Late payments, write-offs and defaults are certain to have an impact on your credit score. If you have made a late payment, then it’s good to check credit score and know if it’s affected. You can strategize accordingly to enhance your credit score.

Moreover, if you check own credit score, this is considered a soft enquiry and has no impact on your credit score. There is no reason why you should not check your credit score often. Go ahead and check it to avoid identity theft, wrong entry of data and avoid unnecessary hassles that you may have to go through. It is advisable to check your credit score at least once each quarter. This not only helps you track your credit score, it also helps in knowing where you stand, financially.

SEE ALSO:Check Credit Score Online

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