28-Mar-2018 written by : FSI-Team
As an individual we take care of a lot of things happening in our life. Factors like health, financial well being is considered at high priority. But have you ever gave a thought, is that it? Am I taking care of everything in my life, absolutely not! There are a lot of things which happen passively which add up to your life on a daily basis and we have no clue about it.
For instance let's take your credit score into consideration, when was the last time you checked your credit score? Are you in the loan defaulter list? What happens when you come to know your cibil score? Is it that bad? Am I the only one who does not check the credit report frequently? No, you are not the only person who does not check their credit score, there are a lot of people who do not know what a credit score is and how the same does contributes to your financial health.
When you apply for any type of loan or a financial product, there are background verifications done before the amount is sanctioned. A credit score is a compilation of financial records on your previous loans and financial products, which helps the lender understand if you are loan worthy or not. Many people learn of credit report and its importance only after their loans are denied.
Due to everything going digital, it is really easy these days to pull your free credit report online. There are a lot of websites who provide credit information for free and if you want a detailed itenary of your report, you will have to pay a nominal charge for the same. If it's this easy, why don’t people check their report from time to time? Some have perceptions that their inquiries may lower their cibil score.
Let us break that myth for you. There are two types of credit inquiries,
When you as a person, try to get your cibil report on your own for review purposes, it is considered as soft inquiry. Soft inquiries do not affect your cibil score.
On the other hand if you are applying for a loan, when the lender conducts background verification, it is considered as a hard inquiry. This type of verification will lower your cibil score. It is advised; if you are denied a loan, do not try to re-apply immediately. This will create a lot of hard inquiries on your report and will stay on the report for up to 10 years.
Now that you understood the inquiry process and what would affect your score, let’s see why checking your credit score is important,
Checking your cibil score can help you understand how you doing financially and where you stand in front of lender's view. When you are trying to apply for a loan, knowing your cibil score will give you an upper hand in the loan process where you can negotiate terms on the interest rates and processing fees. If your score is bad, you can start working on the same, which will lead to a better credit score which will thus help you in future to avail a financial product with ease.
There are a lot of instances where your details can be used by other individual to avail a loan, which can then cause a problem for you. It can adversely affect your cibil score. By checking your report from time to time, you can rest at ease that your identity is not stolen and you can avail a loan with great credit score.
As we all know there are many credit bureaus in the market and bureaus are the one who store our credit information. There are a lot of mistakes committed by the bureaus while updating your transaction details. By checking your credit details from time to time, you can report any errors found from the bureaus end. This process can take a lot of your time; better know your situation before applying for a loan.
We usually consider all these things as less important in our life and don't give the needed attention on the same. If given proper attention to the same, a good credit score can help you in many ways you cannot imagine.