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Credit score is an important indicator of your financial health and helps determine how trustworthy you are as a borrower. It pays to maintain and monitor a good credit score because it can help you get a loan approved faster and entitle you to a host of benefits like lower interest rates, better reward schemes on credit cards and cash backs. A good credit score will make you eligible for better credit cards that will help you make major purchases (like appliances, furniture etc) and pay back over a period of time. In fact, people with a good credit score are believed to be more employable because they are reliable, a quality that employers look for.

A credit score is a three-digit number that is obtained from your personal financial data and credit spending behaviour. Lending agencies, financial institutions or banks usually refer to this number before issuing any kind of credit. Credit reporting agencies usually calculate your credit score and this can also be obtained online for free. The score can vary anywhere from 300 to 850. The higher the number, the better the credit score, which means you will be eligible for lower interest rates on loans. A score of 720 or above is usually considered a good score.

It is always wise to enhance your score before applying for credit.

Here is how you can Monitor your Credit Score:

1. Scan financial accounts – Make it a point to keep a regular track on your spending habits. Take a look at your credit card statements and bank account statements at least on a weekly basis. This will help you take notice of unnecessary or extravagant spending on credit cards.
2. Sign up for free alerts – Many companies and credit rating agencies will allow you to sign up for regular alerts for free. Notifications will be sent to you if spending behaviour exceeds a certain specified amount or set limit. You can also use mobile apps and online trackers to keep a watch on your score.
3. Watch your credit report- It helps to keep an eye on your credit report. Once you register, free credit reports will be sent to you by credit rating agencies. You can ask a report to be sent to you once in four months.
4. Ask your bank- There is no harm in asking your bank to share the credit score with you. Though many banks may not openly share this information, you can make a request if you are a long term customer. Some banks may charge a fee for it while others may provide the data for free.

Apart from these measures, it is important to take note of the various factors that determine your credit score. It will always earn you points if you pay your bills, especially credit card bills on time. The payment history plays a crucial role in determining your score and always make it a point to try to pay your credit card bill in one shot and not in instalments every month. Keep your credit utilization ratio low, pay loan EMIs on time, maintain your credit limit and borrow only as much as you can pay back over a period of time.