04-May-2018 written by : FSI-Team
There is a family emergency and you need urgent funds to fulfill it. You seek financial help from friends and family and you get empty responses. In the mean while you get a suggestion from your friend that you can apply for a loan and immediately think of banking on the idea. You contact your bank and apply for a personal loan and think everything will be smooth and you will get the money, instead you get a reply from the bank stating your loan is been rejected. You try inquiring for the exact reason why your loan is rejected; the reason given by the bank is a "low cibil score".
Similar to this case, have you ever applied for a loan or a financial product and your application was rejected? Did the lender give you reason "low credit score" for the rejection? Have you ever given a though what is a credit score and why is that a factor which is influencing my chances to get a financial product?
A credit score plays an important role in our financial life, especially when you are applying for a financial product. A credit report determines if you are credit worthy and helps banks and lenders to make such decisions. If your cibil score is on the lower side, you will have a hard time to hunt for financial products.
Now that you know, what credit score is and what is the significance of it in your financial life, let us see where and how you can check where your credit stands.
There are many credit bureaus in the market which registers your financial transactions with them. Each bureau has its own criteria and terms of showing where you stand and if you are credit worthy. Not to forget inquiries contribute 10% to your score.
There are two types of inquiries on your credit report if you want to check where you stand,
When you try to check your own credit report just for reference purposes to understand, where you stand is termed as a soft inquiry. In such inquiry, you can simply pull up your free cibil report online and check the same. Not only you, but you can give access to your future employer, your future landlord and also your future could be in-laws to check how you are doing financially and if you are a regular in terms of making payments on time.
Whenever you apply for a loan or a credit card, the bank or any non-banking financial company checks your cibil report to check if you deserve a loan from them. This inquiry is termed as a hard inquiry. A hard inquiry remains in your report from seven to 10 years and it is always suggested not to shop for financial products back to back within short span of time. This will lead to a suspicion during your verification process on why the person has been denied loans before and you may end up with no loan.
You may be able to see what your cibil score is in your credit card statement. There are some credit card lenders to put your credit score in the statement and you can check it every month. This way you get the score for free and also can evaluate how you are doing as far as credit goes.
A credit counselor can help you get a credit report and sometimes for free. Not only will they provide a free report but also will help you understand the same.
This is termed to be the safest way to check your cibil report. Just pay a nominal fee to the bureau and the bureau will send you a detailed report. This way you and you only have access to the report without any third party peeping into it.