STEP BY STEP GUIDE FOR CHECKING YOUR CREDIT SCORE

Most people are not aware of their credit score until they apply for a loan. Just like you need to keep a tab on your physical health and take measures to cure ailments, you need to keep an eye on your credit score and take steps to improve it. The credit score is an indicator of your financial health and your repayment capacity. It’s one of the criteria that lenders judge your loan application on.

Read on to know how and why it is important to check the credit score regularly.     

Also Read: How to Improve Your Chances of Getting Approved for a Personal Loan with a Bad Credit Score

What is a credit score?

A credit score is a three-digit number that gives a gist of your borrowing and repayment behaviour. The number usually ranges from 300 to 900. It is evaluated based on your credit history and can be obtained from different credit bureaus. High credit score means the lender will be willing to lend you a bigger sum or offer a better interest rate.

The good credit scores testify that you have paid your previous loans on time while keeping a decent balance in your account. Based on your past performances, it indicates that you are well-placed to repay the loan on time in future as well and thus, making you a trustworthy applicant.
 

Importance of regularly tracking credit score

There are many advantages to checking your credit score regularly. Here are some of them:

 

• Your credit score informs you about your financial health. Be it good or bad. Monitoring it puts you in control of your credit and eliminates the shock element. If you don’t get good terms or your loan request gets rejected, you know that it’s because your credit score wasn’t that great instead of wondering what went wrong. Basically, information makes you well prepared for the outcome.
• Credit scores are not improved overnight, it takes months. So, if you get to know that your credit score is low, you will have to work on it to build your score over a course of time. It typically takes 6 months to reflect a change in your credit score.
• It allows you to respond to any drastic changes in the score quickly. Scores can be checked on daily, weekly, monthly, and yearly basis depending on how much you want to spend on the subscription. But the bigger point is that checking your credit score regularly informs you of changes to your credit score. Any sudden drop in the credit score can be taken care of with corrective steps after immediately figuring out what triggered the change.

• Sometimes, your credit score may also be low because of an error or inaccurate information in your credit report. Checking your credit score regularly will help you to take timely action and eliminate all errors hampering your score.
• As you monitor your credit score, you learn about what helps and hurts the score. For example, when you see the benefits of paying off a debt before the deadline, you make it a habit or when you see what defaults do to your score, you make sure never to default a loan ever again.
• Knowing and improving your credit score gives you the power of negotiations. You can ask for better interest rates, discounts, rewards, etc., using your strong credit score as a bargaining chip.

 
Also Read: Procedure to check credit score by PAN card
 

How to check your credit score?

 

1. Visit the website

   Visit the credit bureau’s website. Along with options like loan eligibility, credit cards offers, and home loans, the homepage will also show you the charges for credit score updates and you can choose a plan accordingly. A few credit bureaus give one free credit report once a year.

 

1. Create an account

   You need to register details like name, gender, and date of birth, to create a user account and password.

 

1. Select your ID proof

   As your ID proof, you can provide Voter ID number, passport number, driving licence number, Income Tax ID number or PAN Card.

 

1. Input your personal details

   You also need to input some personal details like full address, telephone number, e-mail address, etc.

 

1. Verify your details

   After entering all the above-mentioned details, you need to click on the ‘I accept and continue’ link. As part of the verification process, you may receive a one-time password on your mobile phone that you need to input in the account set-up form. This is to verify that the person asking for the credit report is nobody else but you.

 

1. Generate your credit score

   Click on submit after entering the OTP and within moments, you will be able to see your credit score report.

 

What to do if you have a poor credit score?

A bad credit score is sometimes the fault of your lender. If you paid off all of your debts on time and closed your credit, but the lender did not send a notification to the credit bureau, your credit score will suffer. In that case you must inform the bureau and submit the necessary documents to update the score.
 
But, if it was your fault, you should follow the advice below.
 

• Get a consumer durable loan. You can get this loan to buy home appliances or gadgets. Since consumer loans do not require substantial funding, you can obtain them with ease, and timely repayment can help improve your credit score.
• If you meet the majority of your expenses using credit cards, break the habit right away. Keeping your credit card usage under 30% will improve your creditworthiness.

• In case you are dealing with financial woes, and the situation predicts EMI skips, communicate this to your lender. Debt rescheduling should be preferred over debt settlement. If you have several debts, taking a low-interest loan to pay off multiple high-interest loans is another option.

• Go for a prepayment even if there is a small foreclosure fee. Early loan repayment improves a credit score to a great extent. You can do this with the help of a salary increment, investment pay outs, or windfall gains. 

 
Also Read: A Brief Overview of The Difference Between Credit Score And CIBIL Score
 

Conclusion

 
In conclusion, it is very important to review your credit score before approaching the lender. Even if you don’t need a loan at present, knowledge of your credit history will definitely help you make better financial choices and with life’s uncertainties, you never know when you might need a loan!
 
Disclaimer: This post was first published on 14th May 2019 and has been updated for the latest information, freshness and accuracy.