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14 May

Step By Step Guide For Checking Your Credit Score

  • By Editorial Team
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Introduction

Most people are not aware of their credit score until they apply for a loan but bluntly put, it’s like digging a well when you are thirsty. 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’s that lenders judge your loan application on. So, here we will discuss how and why it is important to check the credit score regularly.     

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 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 when you apply for a loan as 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, you would know where you stand instead of living in an illusion. 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 can take time and measures to build it up.

  • 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 sooner. 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 is low because some information is missing and is inaccurate 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 later 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.

How to check your credit score?

  1. Visit the website:

You need to visit the credit bureau’s website. Along with options like loan eligibility, credit cards offers, home loans, etc. 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.

Now that you know the advantages of reviewing your credit score before approaching the lender and how easy is to get your credit report, what are you waiting for? 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!

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Did You Know

Statement of Account (SOA)

Statement of Account or SOA or bank statement is a record of all financial transactions that take place on an individual's or company's account with a bank or other financial institution. In the case of loans, it is a statement which records EMI payments, Pre/Part-payment amounts, penalty charges, etc. Such statements recored both inflow and outflow of money from a given account.

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