Your credit report and your credit score are critical to your overall financial health as an individual. You can check your credit report for free once every year from each credit bureau in India including CIBIL, Experian, Equifax, and Highmark. It helps you understand your current financial position and gives you the accurate picture your lender may see if you apply for a loan.
Your credit history holds all the records of how you have managed your credit accounts. It includes information about your credit cards, home loans, payment histories, and the total amount you owe. Credit scores such as a CIBIL score are three-digit numbers calculated based on the information available in the credit reports, and they define your credit risk.
Here are six reasons why you should check your credit report regularly –
- Understand Your Financial Situation
Your financial health needs your attention as much as your health. If you plan on taking a loan, or a new credit card, it is imperative to check your financial report to know your financial health beforehand. If your credit score is above 750, you will likely quickly get a loan or credit card. However, if your score is low, you can take timely remedial measures.
- Maintain a Clean Credit report
Checking your credit report regularly gives you a heads-up on all your upcoming or pending payments in the year. If you forget to pay your bills on time, it may reflect poorly on your credit report. Staying up to date with your finances by checking your credit report regularly helps remind you about any payments that you don’t want to miss.
- It Helps to Keep Your Credit score in the Green
Keeping a regular check on your credit score helps prevent any fall in the score. A fallen credit score shows in red colour, while a good credit score shows up in green colour in the report. If your credit score declines into the red zone, it may take many months of penny-pinching to get it back to Green.
- Keep Your Loan or Credit Card Application Under Control
Always check your credit score before submitting a credit card or loan application. Even if your application is filled correctly and all your documents are in order, your credit score is below the requisite level – your application will be rejected. If you check your credit score beforehand and rectify it to ensure it is at the required level – you are much more likely to get approval for loan or credit cards.
- Find Out More About Your Credit score
Looking at your credit report helps you understand the most factors that influence your credit score. Understanding the parameters that increase or decrease your score enables you to build a better CIBIL score for yourself.
- Determine Your Eligibility for a Better Credit Card or Loan
Sometimes, you may want to apply for a particular credit card or loan, but checking your credit score can surprise you. A good credit score means that you are eligible for a better loan or credit card than the one you are applying for.
Contrary to popular belief pulling your credit report does not hurt your credit score. The whole process takes less than ten minutes and saves you a lot of hard work for later. If you want to stay on top of your finances and build a good credit profile, learn how to check your CIBIL score at least once a year and act on it to maintain a good credit score.