At some point in our lives, we need financial funding for a variety of reasons. Maintaining a good credit rating is important to make things easier in these situations. This single indicator plays a major role in the future of a loan application. The credit score helps determine two things. First, because lending money comes with a list of risks, a credit score helps lenders understand how reliable a customer is when it comes to paying off debt. Second, credit scores also help determine the type of loan that is right for the person.
The credit score is a numerical representation of your past credit behavior, which is displayed as a number between 300 and 900. The closer to 900, the better. A good credit score shows a high level of your creditworthiness to lenders. A credit score can no longer be considered an optional requirement for obtaining credit. It is very important for you to get any type of credit, whether it is long term or short term.
According to Ranjit Punja, CEO and co-founder of CreditMantri, customers with good credit scores recently got better deals on loans and credit cards, i.e. people with a credit score above 750, majority banks offer loans at lower interest rates than people with a credit rating. credit score between 650 and 749.
Punja also explained that there are employers in certain industries such as banking, insurance, telecommunications, regulatory authorities such as SEBI and IRDAI, who take credit scores into account when deciding whether to apply for a job. individual. The trend would also shift to other sectors.
In India, credit scores are issued by 4 credit bureaus namely Equifax, CIBILTM, Experian and CRIF High Mark.
Due to the importance it is taking, credit scores are very sensitive these days. But, it is not enough to be aware of the term credit score and the importance it takes. To have a good credit score, you need to keep track of your score and monitor it regularly.
Punja explains that continuous monitoring of credit scores not only helps you maintain good ratings, but also helps you correct mistakes (if any) and negotiate a better deal for your credit needs.
How do you monitor your credit scores?
There are two ways for you to monitor your credit scores, depending on CreditMantri.
1.Monitor scores with credit bureaus
As we know, credit scores are offered by credit bureaus.
One way to monitor credit scores is to check your scores directly with the credit bureau.
The Reserve Bank of India (RBI) has required that each individual be able to access their credit score and associated credit report for free at least once a year. So you can register with any of the credit bureaus (on their websites or apps) and check your credit score for free.
However, if you want to constantly monitor your score, checking it once a year may not be enough. To help you monitor scores on a regular basis, you can purchase a paid subscription from the credit bureaus.
These subscriptions work for a predetermined period like 1 month / 6 months / 1 year etc., during which you get unlimited access to your credit scores. In addition, you are also eligible for credit monitoring and dispute resolution services.
At the same time, it is important that you check the scores with the same bureau each time, as different credit bureaus use different methodologies to assess your credit score. Checking scores with different bureaus each time may not give you a correct picture of the credit score.
2. Monitor scores with FinTech companies
What if you are looking to get credit in the near future and want to improve your credit score, for which you would need to monitor it regularly? To make your credit score more accessible, many financial technology companies have links with credit bureaus.
You can use their services to monitor and improve your credit score. You can check your score as often as you like for free on some of the fintech websites. Additionally, checking scores on financial technology company websites are considered non-technical inquiries and will not affect your credit scores like difficult inquiries.
These sites also have loan and credit card offers for different ranges of credit scores that you can choose from.
Thus, monitoring your credit score is one of the cornerstones of healthy credit. Make sure you keep your score in check by monitoring it at least once every 3 to 6 months.