16-Aug-2018 written by : FSI-Team
Just like getting a periodical medical health check up is necessary, similarly a periodic check for your credit heath is also required. When it comes to health issues, prevention is better that cure and being preemptive can help you stay away from diseases. If we draw a parallel to our credit health then being preemptive in this case can also help you stay have from sticky financial situations? So when was the last time you checked your credit score? If your answer is "not sure" or a "long time back" then we would advise you to go through the discussion below.
First things first, why should you check your CIBIL score at all? Credit score is an important aspect that lenders consider when they scrutinize loan applications. They are the first step for determining if the applicant's loan application will be approved; a low rating could lead to the rejection of the application at the first step itself. Thus a good rating is important for getting any loan. Credit scores reflect your credit history and behavior.
CIBIL score calculation takes into account various aspects related to your loans and credit cards right from the first card or loan. Thus the score cannot be improved or it will not be lowered due to one transaction or over a small period. So if you have a low score and you want to apply for a loan you may find it difficult to improve the score overnight or over the course of few days or few weeks, this may cause you to miss out on an opportunity due to loan rejection over your low cibil score.
Increasingly employers are seeking the credit reports of the applicants especially in the financial sector or higher management levels to determine if the candidate should be hired or not. This helps them determine if the candidate is trustworthy or not and if recruiting him/her expose the organization to any legal hassles in the future.
In case there are any aspects that require attention or improvement you are able to work on them in a timely manner. Credit reports also provide you a comprehensive picture of your credit and financial health.
Checking Score is Now Easy: Often people may hesitate to check their score as they may assume that the process is time consuming or it is complicated and it requires you to pay something. This is not the case; there are four credit bureaus in India and one can easily get their credit report from any one of them easily. All these bureaus have a fairly simple process for getting a credit report which is mentioned on their website. You can do so online too!
What’s more as per the RBI guidelines each credit bureau is mandated to provide one free credit report once a year whenever the client asks for it. This means you can get four credit reports in a year without having to pay anything; so now you don’t have an excuse of not getting a credit report because it costs you money.
Checking Your Own Score Does Not Lower It: There is a section in the credit report which has details about the enquiries made about your score by prospective lenders. These are known as hard enquiries and too many hard enquiries could impact the score negatively.
This may lead some of you to believe that checking your own score could also lower it. However this is not the case as checking one's own score is known as a soft enquiry and it is not included in the accounts section.
So now that you know why you must check you score, make sure you do so regularly. What's more doing so is fairly simple, it does not cost you anything and it has no negative impact on your credit rating.