30-May-2018 written by : FSI-Team
If you are financially conscientious you must already be aware of the fact that your CIBIL score is a parameter of your good financial health. Just like you keep a track of your physical health by conducting physical examinations and checking medical reports, you need to keep a watch over your financial health by checking your credit report.
However, for most people decoding one's credit report seems like a tall task. One of the things you can begin with knows about important dates on your report and how they impact your credit score:
Each of your credit accounts have an opening date. This is an important date to take note of as it the date when your credit account was opened. This is date which determines the age of your credit. One of the factors that determine your score is the age of your credit. The older your credit account, the higher is your score. Too many new credit accounts (opened within a short span of each other will have a negative influence on your score). When you are shopping for new lines of credit such as home loans, the prospective lender will refer to your average age of credit to determine your creditworthiness.
The date of last activity is also referred to as date of status or date paid. This date is indicative of the status of your credit account- whether is paid or delinquent or closed. If there is a negative status attached to this date- such as delinquent, it will have a negative impact on your score. In order to keep your score intact, you need to make regular repayments on your active credit accounts. This will indicate that the date of last activity as paid and keep your score intact.
The date reported is the date that on which information about your credit account is reported to the credit bureau. The most up to date information about your credit accounts such as home loans, credit card or auto loan balance is taken into account while calculating your score. If the date reported is too old, the information is usually excluded by the credit bureau while calculating your score.
There are two kinds of inquiry that happens on the credit report of an individual. Soft inquiry and hard inquiry. When your request for your own credit report to the concerned credit bureau, the date of inquiry is noted on your report as a soft inquiry. This inquiry does not have any negative impact on your score. The other kind of inquiry is a hard inquiry.
Each time you apply for a fresh line of credit, the prospective lender makes a request to obtain your credit report from the bureau. This is now mandated by the apex bank of India as a part of the credit assessment process of each lender. This kind of inquiry is a hard inquiry. With every hard inquiry, your score takes a hit. However, once you start making repayments on the same, your score bounces back to normal.
While a soft inquiry does not have any impact on your credit score, too many hard inquiries in quick succession will be detrimental to your credit health. Besides a prospective lender may deem you as "credit hungry" if too many hard inquiries are found on your credit report. This, in turn, will diminish your chances of obtaining a line of credit when you are in need of the same.