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Credit Score FAQs - 12 Frequently Asked Questions on Credit Score

IndianMoney.com Research Team | Posted On Wednesday, July 10,2019, 05:11 PM

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Credit Score FAQs - 12 Frequently Asked Questions on Credit Score

 

 

A good credit score makes a big difference when you are applying for a home loan or any other loan. If you have already availed a home loan or personal loan, you definitely know the importance of a good credit score.

A credit score is basically a 3-digit number which gives a numerical summary of credit-worthiness. India has credit information agencies like TransUnion CIBIL, CRIF High Mark, Experian and Equifax. CIBIL started operations in 2001, whereas Highmark, Experian and Equifax in the year 2010. These agencies collect credit data (Records of borrowings by individuals) from banks and financial institutions to create a credit report and assign credit score. The 3-digit credit score ranges from 300 to 900. The higher the number, greater is the credibility vis-a-vis loans and credit cards.

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Credit Score FAQs

1. Can I Improve My Credit Score?

Yes, you can. It is always important to have a good credit score, which is 750 or more. You can enhance credit score to increase the chances of getting loans sanctioned. It can be improved by paying credit card bills and loan EMIs on time. Open new credit accounts if required and don’t close unused credit cards if there is history of strong repayments.

2. Can I Get a Better Interest Rate with a Good Credit Score?

It is wrong to say that just a good credit score will get the loan sanctioned. Banks also look at other parameters like employment history, age, educational background and so on. But, with a good credit score, you can negotiate with banks for better interest rates on loans.

3. Will My Credit Score Improve Instantly?

Credit score improves with time. It takes some time to reflect the changes in the credit report. Banks will use the latest report while sanctioning credit cards and loans.

See Also: Cibil Score For Credit Card

4. Can I Get a Loan Instantly with a Good Credit Score?

No, lenders usually take time to process the loan despite a good or excellent credit score. Personal loans are instantly approved, but for processing long-term loans like home loans, lenders take time. For example, banks need 4-5 days to process a home loan. It varies across banks.

5. How Can I Rectify the Errors in My Credit Report?

A credit report with errors results in bad credit score. The errors have to be fixed as early as possible. To dispute errors, you may raise an online complaint with the bank. Fill the form under the dispute resolution section. The credit rating agency would clarify the issue, after receiving the online complaint form. Any errors found would then be rectified and credit score goes up.

See Also: Credit Score India

6. How Do I Know Which Bank Has Reported My Default?

Let’s say you are applying for a home loan with XYZ Bank and this bank is not disclosing the name of the bank that has reported your defaults. The bank you are banking with has restricted access to your information. They may be able to see the dispute type and the credit score, but not the lender’s name. In this case, the credit report can be downloaded online by paying a minimal fee. Get credit score free at IndianMoney.com.

7. Does Being a Guarantor to Someone Affect My Credit Score?

Let’s assume you have a credit card and use it frequently. You get credit card bills that must be paid on or before the deadline. If you default on payments, the credit score is affected. Similarly, when you are a guarantor to someone, the party you stand guarantor to, must not default on payments. If the party defaults on payments, your credit score gets affected.

See Also: Check Credit Score Online

8. Do my Family Members Get Affected by My Credit Score?

Yes, they do. Banks upload your name, address, father’s name (spouse name) and so on, while sanctioning loans. If you default on the loan, your spouse may get impacted.

9. What Happens to My Credit Score When I Cancel a Credit Card?

Be cautious when cancelling the credit card. Inform the bank that you are planning to close the credit card and pay the dues. Collect the No Due Certificate from the bank. Cancelling credit cards with outstanding dues affects credit score.

10. My Colleague Has a Bad Credit History? Does My Credit Score Get Impacted?

Your credit score is not impacted by the bad credit history of your colleague.

11. Will the credibility of my employer affect my credit score?

Yes, it will. Banks may deny loans when your employer has a poor credit history. The credibility of your employer has a major role to play in getting loans sanctioned.

See Also: My Credit Score

12. I Have a Low Credit Score. Does My Employment Get Affected?

If you are working in financial services companies, employers may check the credit scores of potential employees.

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