19-Oct-2016 written by : FSI-Team
Ananya was scheduled to travel to US for an assignment. She applied for a credit card specifically suited for use abroad but her application was rejected due to a low credit score. She shared her dilemma with her colleague Preeti who was also travelling and had applied for the same card. Preeti enquired if knew what was the problem with her credit score and if Ananya ever checked her credit report. Ananya was clueless!
Are you like Ananya blissfully unaware of the need to ever check your CIBIL score till your loan or credit card application is rejected? If yes then it is time to change that; here are five compelling reasons for you to check your credit score regularly.
Like Ananya you do not want to be caught unaware when you require a loan or a fresh credit and it is rejected due to a low credit score. Checking your CIR regularly will ensure that you are aware of your creditworthiness at all times and if required you can act on it in a timely fashion to avoid any unpleasant surprises when you apply for fresh credit. Often there may not be enough time to work on your credit health and reapply for the loan. Additionally the processing fee is not refunded and each hard enquiry diminishes your credit rating.
Even if you do not require a loan it still makes sense to check your score on a regular basis. Looking at the Credit Information Report (CIR) you get a comprehensive picture of all your open debt which can aid you in your financial planning and can also help you assess your financial health. Sometimes there may be credit cards that you may not be using or you feel you have surrendered but they still reflect as open cards in your report. The same may apply to loans; there may be loans that have been paid off but you have not taken a NOC so it may still reflect as current loan. Looking at you report you can judge if you are overleveraged or not.
If one is planning to apply for a loan in the near future then they should definitely keep a tab on their credit report. If the score is low and there are ways to improve it then one should definitely try to do so. A good score can help you save money; so for example if you are planning to apply for a home loan you can negotiate better terms, favorable interest rates and a waiver in fees if you are armed with a high credit score. Checking the score regularly gives you ample opportunity to work on the rating and improve it which may not be possible at the last minute.
It is possible that sometimes there may be an error in your credit report which may or may not be lowering your credit score; either ways it needs to be corrected. There may be errors like a delayed payment reporting which may have not happened , a loan or a credit card included in your debt which may or not be yours etc; these can harm the rating and must be sorted out quickly. Sometimes a wrong address or a wrong detail can be an indicator of potential identity theft and must be rectified as soon as possible. Once you raise the matter with CIBIL wait for the requisite number of days and then you can check credit score online for free to see if the changes have been made.
This may not seem like an obvious reason but a good score can aid you in getting a job. Checking a person’s credit report is part of the background check that is done as a routine for applicants in more credit driven economies. In India it is still limited to jobs in financial sectors and for higher level managerial positions. However SBI with its advertisement where applicants are urged to check their credit health before applying changed this perception. Now being credit healthy is more important than ever before to get a job.
So here are a few good reasons to check your score regularly. Remember checking your own score does not lower your score so do it without any worry.