11-Apr-2018 written by : FSI-Team
A credit report is a pile of information on how you handle your debts. It is basically used by lenders to check if you are credit worthy whenever you apply for a loan. A positive credit report can be a savior in your bad times when you are applying for a line of credit.
A credit report contains a three digit number called a credit score which determines your credit worthiness. The more your credit score is, the more you have chances to get your loan sanctioned in no time. Not many of us take the credit rating seriously; we think it will only be necessary when you are hunting for a loan or a financial product. Not only a good credit score can help you get a loan but also it can help you in many ways, like supplementing your background verification while landing at you dream job, a landlord verifying your report before they can give you the property for rent and so on.
It is always suggested to get your cibil score checked at regular intervals. This way you will have a clear idea on where you stand and if you need to work on building your credit score. The sooner you know, the easier it will get to build your cibil score, if you happen to have a bad cibil score.
On the other hand, there are a lot of individuals who give the credit report importance like it deserves. They regularly check on how they are doing financially and try to keep up with any mishaps in the credit report. But a credit report is not that easy as it seems. There are a lot of factors which contribute to your cibil score and many of us fail to understand all of them.
The most misunderstood part of the report is inquires. There is a lot of confusion which revolves around how an inquiry is made and it is recorded on your report. Does the practice of making frequent inquiries affect your credit score?
Today, we will clear the air for you in regards to inquiries,
There are two types of inquiries, soft inquiry and hard inquiry. Whenever, you yourself opt for a cibil report, it is recorded as a soft inquiry which does not affect your score. On the other hand if you apply for a loan or a credit card, the lenders conduct background verification on you by pulling your cibil report, that's recorded as a hard inquiry which affects your credit score. Every transaction made, stays on your report for at least 7 to 10 years.
Under the credit reporting act, when a bureau hands a report to the customer, it should have all the information on it including who all have opted for your report. Both types of inquiry should be listed on your report, so that you have a clear idea on who all had access to your report and weather you authorized them to view it.
As mentioned earlier, a hard inquiry can seriously damage your cibil score. For example, if you tried applying for a credit card and your application gets rejected; do not apply for a new one immediately. Multiple inquiries in short span of time gives an indication that you are desperately looking for a financial product and this will give a red flag to your future lending prospects. Even if because of hard inquiries, you can get loans for bad credit but with a higher interest rate.
Yes, why not! You can raise a dispute against an inquiry. Though the lenders have pre-approved permission to check your report, you can raise a dispute against them if you have not applied for a financial product in the past with them. If a potential employer wants to check your credit report, they will take consent from you before they apply for your credit report. If you are not comfortable sharing the credit information with the company, you can simply deny them.
While inquires don't affect your credit score to that extent but still it is counted on the credit score. So next time you check your report, you know how you can evaluate inquiries.