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Credit Score – you’ve heard the term before, haven’t you? You also have a vague idea that it’s a number banks inspect to determine your credibility. But do you know who calculates your Credit Score and what factors determine it? Well, this article will answer all your questions about Credit Score and all its ramifications.
A Credit Score is a three-digit number indicative of your credit behaviour. Consider it marks given to you by financial institutions for your financial behaviour. A high score means you have good money-management skills and that you repay your debts on time. Likewise, a low score raises questions about your financial credibility.
How does this impact you? Well, banks always check your Credit Score before processing your loan or any other kind of credit request. A good Credit Score will help you get a loan or a Credit Cards easily. Moreover, you can bargain for better rates of interest on loans if you have a good Credit Score.
In a nutshell, your Credit Score tells financial institutions whether they can extend credit to you or not. A good Credit Score means you are a safe bet, and a bad score translates to ‘uh-oh, maybe next time’!
Your Credit Score is computed by Credit Information Companies. There are four companies in Indian which do the job– CIBIL TransUnion, Experian, Equifax and High Mark.Let’s unveil the mystery around how these companies compute your score.
When you make a transaction—the one that is relevant to determine your score—banks send details about it to all four credit bureaus. To send details to all credit agencies is a mandate by the RBI. Essentially, banks keep Credit Information Companies up-to-date about your monetary habits. If a bank needs to check your Credit Score, they can approach any one of the bureaus. It doesn’t matter which one because all will have the same score for you– all four are equally authoritative and on par with each other.
After receiving information from the bank, credit bureaus get down to the task of collecting more information about your financial habits from other banks and financial institutions. The credit bureaus then processes this information to formulate what is called a Credit Report.
Now, what is a Credit Report? A Credit Report is your financial marks card. It contains your Credit Score. It’s wiser to check your score from time to time.
It is very important that you keep a close eye on your Credit Score. It is the best way to gauge your chances to get a line of credit. Another reason why you should track your score is to know if it dips, or if an error has been made by credit agencies while calculating your score. This will help you make timely amends.
Though the processes followed to compute your score might differ from agency to agency, your Credit Score calculated by all will be the same. This is because banks intimate the relevant information to all four agencies. Therefore, no matter which agency a bank picks to check your Credit Score, there will be no major discrepancy in it.
Of the four agencies, CIBIL, however, is the most popular since it was one of the first Credit Information Companies to start operations in India. This has fuelled the notion that CIBIL Score is more accurate than a score from other agencies. This, however, is not true. Banks give equal weightage to scores from all four agencies. Equifax, Experian and High Mark Credit Scores are as good to banks and other financial institutions as CIBIL Score.
BankBazaar has tied up with Experian, which means that we can help you check your Credit Score for free. Otherwise, it costs a few hundred rupees.
Though many believe this, it’s not true.
All Credit Information Companies, including CIBIL, create your Credit Reports which tell banks about you credibility. Second, CIBIL and the other credit agencies do not entertain requests from individuals to make changes to financial details in Credit Reports. Changes are incorporated when banks provide relevant information to these agencies. This ensures that information in your Credit Report is legitimate. After all, your Credit Score is one of the most important factors considered by banks when deciding about your loan or Credit Card application. Your Credit Score also determines the interest rate banks chalk up for you.
So make sure that you score big on this one!
BankBazaar feels that you should always be in complete command of your personal finances. In order to help you with this goal, we have made provisions for you to check your Credit Score for free. Knowing your Credit Score before applying for a loan can help greatly.
If you have a good score, you can be rest assured that your loan or Credit Card application will be processed without any hassle. You can even leverage a good score to ask your lender bank for better rates of interest and additional benefits. On the other hand, seeking credit with a poor score will further lower your score. Let’s not even imagine getting approval for a credit line. Hence, check your Credit Score before you apply for a financial product. Work up the score if it’s not in the acceptable range.
TIP: Credit agencies review and renew your score every few months. If you have a poor Credit Score, start managing your money wisely and pay your dues on time for a good few months. Credit agencies will reward you by boosting your score.
It depends on the kind of enquiry being made. There are two types of enquiries – hard and soft enquiry. Hard enquiries send your Credit Score down by a few points, while soft enquiries do not impact your Credit Score.
An enquiry made by an individual is called a soft enquiry. BankBazaar will make a soft enquiry on your behalf when getting your Credit Score from Experian. Hence, this will not impact your Credit Score in any manner. Moreover, checking your Credit Score on our website is free!
TIP: It’s wiser to check your Credit Score from time to time so that you stay in the know. Always check your Credit Score before applying for a loan/card. You will know whether your score will tide you over or if it needs fixing.
A hard enquiry is when a financial institution checks your Credit Score to take a decision on your credit application. Every time you apply for a loan or a Credit Card, the lending institution checks your score. Each time a bank checks your score, your score will dip by a few points.
TIP: If you are applying for a loan or a Credit Card, do not apply to many banks at the same time. Too many enquiries will hurt your Credit Score.
We need your PAN and phone details to extract your Credit Score from Experian. We assure you that your personal information is secure with us. We will not use your PAN or phone details for any purpose other than to extract your Credit Score. We will not share your details with anyone else. Pinky swear!
Your Credit Score will be any number between 0 to 900 points. Use this guideline below as your reference to know what your score means.
It is understood that having high balances on your credit cards can significantly reduce your credit score. Apart from that, there are several other factors that can hurt your credit score:
When you work on improving your credit, you should be very patient, so as to not get discouraged. Credit scores are calculated from your credit report. When you request for the score from multiple credit reporting bureaus, you may see a slight variance in the figures. This is fine, as long as the difference is not massive.
In order to understand how your credit score changes over time, you should know how often there will be updates to your credit report. Lenders/creditors usually report your credit information (both positive and negative) to credit bureaus once a month. So, technically your credit scores can change a little each month, based on the information that is updated.
Most of the changes in your credit score happen incrementally. Although you would not see changes instantly, over a period of time this can add up to a considerable amount.
However, there are certain factors that could instantly have a huge negative impact on your score. This includes a delinquency, i.e., a significantly late payment such as a 30-day delay on a credit.
Another big influence is the credit utilisation ratio. This refers to the amount you owe as debt as opposed to your credit limit. So, an increase in credit card debt will cause your credit utilisation ratio to rise, which in turn drops your credit score.
Consider another scenario in which you pay off all your credit card debts in one go. Your credit utilisation ratio will fall in this case. This would lead to a temporary hike in your credit score.
A bank or lender would check your credit score or report to review your credit management skills, based on the review, a lender may or may not give you a credit. It is advisable to keep an eye on the credit score before applying for a credit card or loan. If you have a poor credit score and you keep applying for credit, every reject will further lower your score.
A good credit score will empower you with the ability to negotiate the interest rates. The banks or lender would like to offer a credit line to someone with a better credit score.
As per Reserve Bank of India (RBI), every financial institution is expected to send financial data of an individual on a monthly basis to credit bureaus. Currently, there are four credit bureaus in India including CIBIL, Experian, Equifax, High Mark. The credit bureaus collect financial data that is useful for the credit score/report. All the four credit bureaus use a similar method for calculating the credit score, no matter from which bureau you’re receiving the score, it will have the importance as the other.
Based on the information from your credit history, such as details of a loan, credit card, and the payment habits, the credit bureaus will calculate a credit score that will indicate your financial credibility.
The following factors will be considered in the calculation of your credit score:
The credit score is updated on a monthly basis based on the relevant information provided by financial institutions. It is advisable to keep an eye on the credit score to determine your financial credibility while applying for a loan or a credit card. It will help you in avoiding the situation where your credit application are getting rejected due to a poor score. By monitoring the score on a regular basis will help in identifying mistakes and correcting errors before they are too late.
When you are obtaining your credit score or report, it is considered to be a soft inquiry and it doesn't have any adverse impact on your score. When the bank or lender inquiries for a credit report, it is referred to as hard inquiry and it can reduce your score. You can be rest assured that your credit score won't get impacted due to soft inquiries.
A credit score inquiry through BankBazaar would require furnishing PAN card details along with phone number. This information is required for verification purpose only to identify you as the owner of the report. The credit score is completely free in addition to the process being simple and fast.
If you have a good Credit Score, you can avail loans and Credit Cards faster and with ease. Check yours now!
Get The Best Credit Card - A good Credit Score may get you the best of Credit Cards. Get a feature-loaded card and reap the benefits.
Quick Loan Approval - A good Credit Score works like an expressway for your loan application. Banks may approve your application quickly and readily.
Better Interest Rate - With the backing of a good Credit Score, you can bargain for a lower rate of interest on loans and Credit Cards.
Loans Made More Affordable - Loans come saddled with processing fees and many other charges. You can bargain your way out of some of these charges with a good Credit Score.
Check your Credit Score right away and see if you are eligible for all these benefits. You can check your score on BankBazaar at zero cost.
Credit Score is one of the most misunderstood topics in the financial book. Here are four secrets to help you understand your Credit Score better.
Credit Score ? Credit ReportYour Credit Score is calculated based on information present in your credit report. Your credit report presents details about your credit accounts, credit application and debt repayment, among others.
Checking Your Score Will Not Hurt ItWhen you or a company enquires about your Credit Score, it’s called a soft enquiry and it does not hurt your credit score.
Credit Score MathThere are five prime factors that go towards deciding your Credit Score. They are - debt repayment, credit utilisation ratio, average credit age, type of credit account (secured / unsecured) and Credit Score enquiries made.
Keep An Eye On FraudYou did nothing wrong and yet your Credit Score is low? Please go through your Credit Report thoroughly and immediately report any unauthorized activities to your bank to correct your score.
It’s important that you check your Credit Score regularly. BankBazaar has partnered with Experian and we will fetch your Credit Score at no cost. It’s just a matter of a few minutes.
Given the interest rates edging up this year, maintaining a healthy credit score is vital. Credit score directly influences whether you will be eligible for a loan and how much interest you will be paying back. Higher the credit score, lower is the interest rate and the vice versa. Any lender before approving a loan application or credit card application analyses multiple factors and one of the major aspects is checking the credit score that can drastically drop the chances of the loan getting rejected.
If the lender assumes you as risk borrower even though they will approve your application, but the chances are high that the interest rates will be tremendously high. So, before you plan to get an application approved keep a track of your credit score on regular basis either by taking free CIBIL score or subscription based CIBIL score. Scores normally range from 300-850. While above 750 is considered as a good credit score and can get your application approved in lower interest rate, scores below 750 shows your defaults that can increase your interest amount. If your score is below 550 chances are high that you loan application may get rejected. So, track your credit score for free from the various credit bureaus.
Credit reports are a summary of an individual's credit history. The report contains details of the credit and loan history along with other basic details. Most lenders (banks) use the credit reports in making effective lending decisions. In a credit report, you will find information related to all types of loans and credit account, the report will also contain details such as the name, date of birth, PAN card number, address, etc. You can also find details related to the last credit report check performed by a lender. In India, there are four major credit information companies (CIC)) that provides credit reports of individuals. Some of the CIC offer a free credit score check while the other don't, however, lender pay a fee while obtaining a credit report of an individual. When an individual applies for a loan or a credit card, the bank will review their credit report before approving the loan/credit.
The CICs collect the individual's information from financial institutions such as banks as well as government agencies such as the Income Tax Department. These reports help the lenders in minimizing repayment defaults by avoiding individuals with a bad credit history. Though the banks are not solely relying on these credit reports to give out loans/credit, these reports play a crucial role in the calculation of eligibility.
The following CICs gather individuals financial information to prepare credit reports in India:
The CICs will evaluate an individual's credit history to calculate a score that represents the individual's credit worthiness. Each CIC has their own method of assigning the score, however, a high score will indicate a healthy credit score while a low score can decrease the chances of loan application approvals. Most of the CICs will provide you with a free credit score while a fee is charged towards the credit reports.
The credit reports are used by lenders such as banks to determine the repayment capability of a loan/credit seeker. The credit report provides a useful insight into understating an applicant's past credit repayment behavior. A credit report will also contain information related to late or missed payments that can adversely affect your credit score. When an applicant applies for a loan/credit, the lending institution will look into the credit report to determine whether you will be able to repay the loan amount. There can be various reasons for obtaining a credit report, such as:
You can refer to any CIC's website to check whether you can purchase a quick credit report of yourself. These reports will help you in keeping a close tab on your credit score that can be useful while applying for any type of loan/credit. Reviewing the credit report periodically will also enable you to report any incorrect entries/information. If you are planning to apply for a loan/credit card, it is essential to make sure that you have a healthy credit score and report so the chances of loan application approval are higher.
Most CICs offer credit reports through online and offline mediums. The individual will require producing of required details and make a payment to get his/her credit report.
The following documents and details are required for obtaining a credit report online:
The following documents and details are required for obtaining a credit report offline:
The online process will be quicker compared to the offline method, however, you can track the status of your credit report for free. The CIC will typically email the password-protected credit report to the individual when the credit report is requested through the online facility. In the case of offline application, the credit report will be sent through postal/courier services.
Most often, the term credit score, credit rating, and credit reports are confused with the meaning of the other term. However, the following list should help you in understanding each of the terms:
When you apply for credit, the lender will assess two metrics that helps them take a decision on your creditworthiness. These are your credit score and credit report. For a better understanding of these factors, we have differentiated them in the table below:
| Credit Report | Credit Score |
| Your credit report has information on the current and past credit agreements that you hold. These include mortgages, credit card accounts, student loans, and inquiries on your credit history. | A credit score is similar to a grade that is provided to your credit report. It is a 3-digit number that usually ranges from 300 to 900. |
| The credit report is a reflection of your credit management, and you have control over the listings there. | The credit reporting bureau assigns you the credit score based on your credit history. |
| The credit report gives an outline on how much you owe your creditors over an extended period of time, whether you have been making payments consistently, and for how long each account was open. The report also lists associated public records against you, such as court judgements, bankruptcy filings, etc. | A high credit score indicates that you are a low risk borrower, making you more likely to qualify for a loan. |
| In order to access your credit report, you can get in touch with credit reporting agencies or use a credit monitoring service that offers you this information. | Your credit score is a part of the exhaustive credit report that you receive from the credit bureau. |
Similar to individual credit reports, the CICs prepare credit reports and assign credit ratings to businesses and all other types of firms. The credit report for businesses is closely reviewed by suppliers and government agencies while providing utility and business contracts. In fact, business and companies are required to provide their credit rating while applying for electricity, gas connection, phone, internet, and various other types of services. The credit reports also help businesses in managing market risk by carefully choosing their suppliers and business partners. The credit report enables the reviewing company to make business decisions with confidence.
The credit reports for businesses provide information related to the establishment, owners/directors, employees, profit and loss, liability, assets, pending court cases (if any), and various other details. These type of credit reports can be expensive based on the amount and type of information it offers.
If you are going through the credit report for the first time, the information and technical terms can turn out to be a little overwhelming. There are various acronyms that can sound similar to other terms, however, the following list will help you in knowing few of the key terms:
NA or NH: If you never owned a credit card or took a loan, there are chances that you will see an NA or NH on your credit score. NA or NH indicates that are there no, little, or insufficient credit activity to create a report or to generate a credit score.
STD: Applicable to an individual's credit report where the payments are made with the due dates.
SMA: Applicable on a credit report when the borrower has delayed the repayments.
DBT: This indicates a doubtful situation where the credit information has been inactive for over 12 months.
LSS: A credit report can be remarked as LSS if a lender reported the loan/credit card account as loss or if the account remains as a defaulter for a longer period of time.
DPD: Days past due (DPD) indicates the number of days that the account has not received a payment. Written Off/Settled Status: In a situation where the borrower could not make the repayment but came to an agreement with the lender for either a repayment plan or a settlement will indicate a written off or settle status.
A credit report is a detailed account of a person’s credit history. The credit report will include details of your credit accounts, like, credit cards, auto loans, home loans and any other form of credit availed from a registered lender. The credit report will also include details like payment history, credit limit and account balance, opening date of credit, status of loans (close or open, paid in full, not paid in full). The report will also include new credit inquiries, collection records and public records, for cases in which an individual has filed for bankruptcy or a tax lien. A credit report can seem like quite an intimidating document to read, but listed below is a section-wise breakdown of how a person should read his/her credit report:
Personal Information : This section of the credit report will contain information pertaining to the individual’s identity, such as, the person’s name, address, current and previous accounts, date of birth, etc. An individual should check the details provided under this section, if there is an incorrect address in the report or the person’s name has been misspelled, he/she should report this to the Credit Rating Agency (CRA) as this could be a sign of wrong data being reflected in the report or credit fraud.
Account Information: This section of the credit report will carry information pertaining to the person’s present and past credit account. The individual should check the details of this section carefully as this is quite a detailed section. The following details should be checked:
The individual should check the details in this section to verify that they are accurate. The balance reflected in various accounts are on the statement date, this can be a little confusing, as it may reflect a balance even if the individual has paid off in full or may show account that were closed prior to receiving the Credit Report.
Public Records: This section of the Credit Report will list and bankruptcies filed by the individual, tax liens availed by the individual or collection accounts. The dates provided in this section should be checked as they will directly affect how long they will appear on an individual’s credit report and affect the person’s credit score.
Inquiries: This section carries data pertaining to any inquiries made by companies regarding an individual’s credit score. If an individual applies for multiple lines of credit, this could affect his/her score negatively. In most cases inquiries do not affect a person’s credit score, as they are soft inquiries by lenders for promotional purposes. A soft inquiry is generated when the request for the credit report is not related to the individual’s request for credit.
A great Credit Score is anything above 800. If a bad Credit Score is the bane of your life, you can use the following tips to send it soaring. Want to know your score?
Be FrugalKeep your credit utilisation ratio at 30% for a good Credit Score. If you are struggling to stay within this limit, then get a card with a higher top limit.
Seek VarietyA combination of secured and unsecured debt will send your Credit Score upwards. A Credit Card is an unsecured debt whereas a Car Loan is a secured debt.
Advantage of Old Credit Card AccountsThink twice before you close an old Credit Card account as long running accounts add more value to your Credit Score. And if you are not using your card, keep it safe to prevent misuse or fraud.
When it comes to credit reports, scores, or any debt in general, traditional perception is often seasoned with myths and misinterpretations. So you should not let that information influence your financial conduct. You should understand that credit is a financial tool/facility like any other. Its neither good nor bad on its own. The way in which you use it is what gives it a good or a bad flavour.
Listed below are some of the most common myths about credit that you should know:
When you approach a lender for a loan, four elements of your credit report are analysed:
If there is no established credit history for you, you just have to get someone to co-sign or authorise your loan. In case you do not have someone who can co-sign for you, you can explore the option of getting a secured credit card. This type of card requires you to put up cash as collateral. Once you start using the credit card, you will be able to establish a credit history. It is important that you make payments on time and use credit conservatively. Be patient, as it will certainly take time to build a credit history. Once your credit history is periodically evaluated, if you have a good standing, your credit score will increase.
If an individual accesses his/her own credit report, it will not have a negative impact on the score. In fact, it is a healthy practice to check your credit report at least on an annual basis. Reviewing a report results in a “soft inquiry” that will only be reflected in a personal credit report. When a lender reviews the credit report, a “hard enquiry” will be added. These hard enquiries are shown to other lenders who review the report in the future, as these may represent new debts that are not yet visible on the credit report. Too many hard enquiries can have a negative effect on your credit score.
A bad credit report can be rebuilt over time. The report shows all credit issued under the consumer’s name. It also shows all items that are closed or inactive. If you have missed payments or have made late payments, it can remain on your credit report for up to 7 years. In this time, you can rebuild your credit report by paying your dues on time, looking for better credit choices, and being judicious while spending. You have to remember that an old negative information in the report is less important than a recent positive one.
Credit bureaus are not owned by the government. However, the government has laid down many laws on how these should operate.
Using cash for all payments is certainly not better than using credit responsibly. This is because a consumer has to develop a credit history (displaying responsible credit usage) in order to establish a good credit score. If a consumer does not hold various types of credit accounts, his/her credit score will not be as good as another individual with a history of responsible credit usage.
The PAN card is required for obtaining the individual’s score accurately. The credit score can also be obtained by using other valid Proof of Identity (PoI) instead of the PAN card. The PoI helps in identifying individuals in the database.
No, the inquiry will not affect your credit score. When you apply for a loan or a credit card, it can have a slight impact on your credit score but when you are checking your credit score it is not.
The phone number helps in identifying individuals accurately. Your credit report will already have your phone number, when you provide your phone number, it is verified against your records to ensure you are the right recipient for your credit score.
There are no limits to the inquiry of credit score. You can check for your credit score as many times as you need to. The inquiry for the credit score is considered as a soft check while only hard checks can impact your credit score.
The credit score depends on the credit report changes, as and when the changes are made to the credit report, the credit score would change depending on the positive or negative impacts. For example, when you are applying for a credit card or loan, making payments towards the credit, it will impact your credit report and the score.
The credit score range can vary depending on the assessor, however, the value will represent the same level of creditworthiness. The credit score summary will also indicate the health status, it will tell you if a particular score is excellent, good, average, or poor.
Credit score may vary based on the credit rating company. The credit report and score will provide you with an indication of whether you have a good or bad score. A good score with a particular assessor will more likely to have a good score with another assessor.
There are few factors that are considered while calculating an individual’s credit score. Primarily, the account information that includes information of credit cards and loans, the public records containing information pertaining to tax lien and bankruptcy, and the hard inquiries made by your lenders will be accountable for the calculation of credit score.
This will depend on your credit history. If you have multiple credit cards with a higher limit and you are under-utilizing or over-utilizing it, this can impact your credit score negatively.
The following information will be included in your credit card report:
A credit report won’t contain any information related to your checking or savings accounts. Also, the information pertaining to criminal records, medical history, lifestyle, and other details are not included in the credit report.
This will depend on various factors such as the inclusion of hard inquires, payment details, credit card, and loan applications. As soon any changes are detected, your credit report would change. The information is obtained on a monthly basis for the changes to be implemented. If you find any error on your credit report, you are recommended to get it corrected from the assessor.
Unless it is incorrect, no details can be deleted from your credit report. The credit report provides an insight of your credit history and lending worthiness. Most lenders vastly depend on the credit reports to assess the lending risks.
If you notice any error or wrong entries in your credit report, you can get in touch with the credit report provided to get it rectified. The process is simple, you can get in touch with your credit report provider through phone, email, and other mediums.
No, the Credit Information Report contains details of credit history and inquires, CIBIL, like various other credit rating companies have their own method of calculating the score based on the information on the credit report. The Credit Information Report has all the details of an individual’s credit date while the CIBIL score indicates the credit worthiness. The CIBIL score is derived from the information available in the Credit Information Report.
Your credit report can be accessed by you, lenders, and government recognized regulating bodies.
The lenders refer to the credit score to determine the credit worthiness of individuals. It helps the lenders or the banks to understand the risk factors involved in lending out money to an individual.
No, the CIC collects information from various financial institutions but doesn’t change any data. The CIC compiles information related to credit transactions and payment histories of an individual.
A score of 700 and upwards has a higher chance of approval for credit card application. The banks might hesitate to give you a credit card if the score falls under 700.
Experian’s credit score ranges from 300 – 900. 900 being the highest score.
There are instances where you can find yourself rated differently. India has four credit rating agencies formed and authorised by the Reserve Bank of India (RBI). They are CIBIL, Experian, High Mark, and Equifax. The parameters and the credit rating module used by each of these agencies will differ. The amount of importance placed on each of the considerations will also vary. For instance, payment history, which is one of the normally considered parameters, shall be weighed differently. As a result, you are rated differently.
In the formal banking system, the agencies garner the credit details of every customer from Non-Banking Financial Institutions (NBFIs) and banks. The information is massive. It includes details such as account history, payment history, deferred payments, missed payments, loan applications, loan approvals and disapprovals, credit accounts etc. You may transact with many bankers, licensed brokers, and NBFIs. All lenders may not report to the same agency. When you are picked up by different agencies, there can be a minute difference in your rating. All credit crores are equally valid.
Experian was licensed in 2010. An individual is rated in the range of 0 and 999. 961-999 is considered excellent, 881-960 good, 721-880 fair, 561-720 poor, and 0-560 very poor.
CIBIL was licensed in 2009. CIBIL uses advanced analytics. An individual is rated in the range of 300 and 900. Anything above 750 is considered good. The parameters include credit exposure, credit utilization, credit history, and credit type and duration.
EQUIFAX was licensed in 2010. An individual is rated in the range of 300 and 900. The parameters used include account categories, the number accounts, consumed and available credit, credit history, and the length of the payment history. Anything more than 750 is considered excellent, 700-749 good, 650-699 fair, 550-649 poor, and anything below 550 bad.
High Mark was licensed in 2010. The lowest credit score is 300 and the highest 850. An individual with a good score is considered more potential than an individual with a poor score.
How your credit score is interpreted is more important than just a number.
Checking credit reports once a year seems ideal unless you have some strong reasons to review them frequently. A free copy can be obtained via any of the rating agencies that compute the credit score of a customer using these reports. No information is shared among the agencies. In lieu of reviewing a single report, be advised to review all the reports at the same time if it was not done earlier. Check the details thoroughly and make sure they are error-free. Dispute the errors or the wrong information if any.
Credit scores can be reviewed based on your comfort zone. Checking yearly may seem adequate for some, but a majority of people prefer reviewing monthly or even weekly. Despite how frequently you check, your score should not be impacted. Be focused on the overall trends in lieu of daily trends. Credit scores can be frequently checked in the following circumstances:
A credit score tends to change from time to time. A lower score may turn higher or a higher score may turn lower depending upon your credit reports. A person can also maintain a consistent score. Being well-rated is always better for many reasons. You can have multiple checks. If you notice a reasonable hike in your score compared to the previous review, you can:
Yes, credit reports contain your overall banking history and are used to assess your credibility, which is your credit score. A free copy of your credit report can be obtained once a year from each of the credit rating agencies that include CIBIL, Mark High, Experian, and Equifax. You can also request for obtaining all the credit reports at once.
A sound credit history is useful to apply for a loan. It shows how effectively you have managed to repay the earlier obligations. If you have never used a credit card or never borrowed a mortgage, your credit history stands nil. Lenders may not issue a credit card or prolong a loan. Consider the following ways to build credit with no credit:
Yes, you can. Over 8 million adults are affected by identity theft every year. Review your credit reports once a month. Be safeguarded by obtaining an updated credit report to review for any doubtful fresh accounts. Observe the below cited general identity theft signals on your reports.
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Read moreOne of the most common myths associated with credit scores is that checking your credit score quite often will bring it down. Although, a large number of people are aware of their credit score, most of them are not clear about the frequency at which it should be checked.
What is a credit score?A credit score is a 3 digit number between 300-900, 900 being the highest. It reveals the creditworthiness of an individual to banks and other financial institutions. Generally, lenders consider a credit score of 750 and higher as ideal. A higher credit score increases your chances of getting a quicker approval for loans and credit cards, better rewards and benefits on cards, lower interest rates, and so on.
Types of enquiriesThere are two types of enquiries - hard and soft. When you check your own credit score, it is referred to as a soft enquiry. A soft enquire does not have a negative impact on your credit score. You can get a free credit score from credit bureaus as well as other online platforms. On the other hand, when your bank or lender initiates a check, it is considered as a hard check. Unlike a soft enquiry, a hard enquiry affects your credit score negatively. When a bank does not approve your loan application, it is better to wait before immediately checking with other banks. This will result into more hard checks that can damage your credit health even further. Therefore, it is important to limit the number of hard enquiries in a year to minimize any potential long-term effect on your credit score.
A credit score represents your creditworthiness and hence is an important factor that lenders consider while approving your loan or a credit card application. Checking your credit score is a good financial habit that you should start following at an early age. You can improve your credit score by taking simple measures like making all the bill payments on time, maintaining a low credit utilisation ratio, paying off all the dues, and not be removing old accounts with good credit history.
14 August 2018
For those who do not have a credit history, it will be more difficult to get access to loans in the long run. Credit score and credit utilization ratio are two of the most important factors that will have a huge impact on your credit score. For those who do not have a credit history at all, it is a good idea to develop one. The first step in this direction is to apply for a credit card.
Those who are debt free will have a problem in getting a loan. This is why having a credit card and using it the right way will help you build a credit score. A good credit score is anything that is 700 and above and the ideal credit utilization ratio is around 30%. What this means is that you can use only 30% of your credit limit and you should be paying your credit card bills regularly.
01 August 2018
A good credit score is essential for almost all stages of your life as an adult, be it buying a car or moving into a new house. Ideally, on a 850 point scale, it is recommended that you have a score that is above 690.
The first step that you need to take is to make sure you see where you stand. To do this, first check your credit score. To build a good credit score, you need to have a lot of financial discipline. The first thing that you need to do is to make all your credit card payments on time and make sure you are not paying just the minimum balance. Pay the full outstanding. Also, make sure you do not default the payments on other loans that you may have in hand.
The other steps that you need to take include maintaining an ideal credit utilisation ratio. So, avoid maxing out your credit card. You should be spending only around 30% of your total credit limit. This way, you will be able to maintain a good credit score. A good credit score will make it easier for you to get loan approval in the future.
27 July 2018
A credit score is extremely important if you want to get a home or car loan. In order to have a healthy credit score, you need a decent credit history that suggests you are responsible about repayments. Using single or multiple credit cards is one of best ways to build a credit history. But what if you don’t have a credit card and are not comfortable using one? Don’t worry, you can still build your credit score even if you don’t have a credit card.
Let’s check out some of the best ways to improve your credit score without a credit card:
• Apply for a secured credit card: If you are not able to get an approval for your credit card application, you can opt for a secured credit card. A secured credit card is easy to get and requires less enquiry as it is issued against some security such as fixed deposits with banks. On the other hand, a credit card is an unsecured type of loan. A secured credit card holder can increase the credit limit and also earn interest on the FD account. It works just like an unsecured credit card after the initial deposit is being made. Similar to a unsecured credit card, all transactions are reported to the credit bureaus and used for calculating your credit score when you use a secured credit card. Although a secured credit card does not come with an annual fee, you should learn about the other fees that are associated with the card. Other fees can be late fees, returned payment fees and so on.
• Credit card against savings account: You can also get a credit card against your savings account as some of the major banks offer this facility. You will have to deposit a certain amount of money in the account for the bank to provide you with a credit card.
• Open a joint account: This is one of the most easiest ways to start building your credit. You can open a joint account with a family member who has a well established credit history. As joint account holders, the account will appear on both of your credit reports and impact both of your credit scores.
• Become an authorized user on another credit card: You can even ask a close friend or family member to add you as an authorized user to an account they already have. One of the benefits of being an authorized user, is that you can make purchases on the card, but you won’t be responsible for repaying any debt.
Once you get a secured credit card, make sure you are regular on your payments. It is of utmost importance that you pay all your bills on time in order to maintain a healthy credit score. Slacking on your monthly bills reflects badly on your credit score. Also, keep a tab on the credit utilisation ratio and make sure it is between 30% - 40%.
16 July 2018
A credit score is a three digit number between 300-900 that represents creditworthiness of an individual. The score is calculated on the basis of an individual’s credit history and repayment behaviour. A higher credit score increases your chances of getting a quicker approval for your loan or credit card application. However, there are several factors that affect your credit score. Let’s take a quick look at some of them.
• Credit utilisation ratio: Maintaining a low credit utilisation ratio is essential to increase your credit score. A higher credit utilisation ratio suggests you have been increasing your debt. This will not be good for your credit history and will in turn affect your credit score negatively.
• Hard enquiries: When a prospective lender or a bank checks your credit score, the enquiry is termed as a hard enquiry. Multiple number of hard enquiries can decrease your credit score. Hence, make sure to limit the number of hard enquiries.
• Payment history: A good payment history is important to get an approval for your loan or credit card application. Make sure to pay your bills on time and avoid payment of late fees as it will reflect negatively on your credit score. Delayed payments or non-payments also indicate that you are not serious about paying your debt or that you are incapable of paying them.
• Do not remove old accounts from report: Do not remove old accounts, deactivated accounts or accounts with negative history from their credit report. Your credit score will be harmed if you remove old accounts that may have a good repayment history. Also, if you have paid your debts, then you should keep them in your report as they will improve your score and also show your creditworthiness
• Not checking credit report: It is advised to check credit reports periodically as there could be some errors in it. If there is an error in your credit report, it will affect your credit score and thereby delay your loan or credit card application. If there are any errors in the report, you can rectify it at the earliest.
• Mix of credit types: It is better to have a mix of secured and unsecured loans as it suggests that you can handle different types credit.
•Settling loan: Settlement of a loan is equally important as overdue loans reflects poorly on your credit score. There are instances when individuals are unable to settle loans taken by them. This reflects extremely poorly on the CIBIL Score and brings down your chances to get an approved loan. It is quite possible that banks will reject your loan requests if you have unsettled loans.
An individual should keep in mind all the aforementioned points to improve his/her credit score.
08 June 2017
A credit score represents your creditworthiness. Banks and lenders refer your credit score before approving your loan or credit card application. Here are some of the top ways that will help you achieve an excellent credit score:
• Check your credit report: It is important to check your credit report regularly as it may have errors. If you find errors in your credit report, you can report to the credit bureau immediately and get it fixed. As per the directive from the Reserve Bank of India (RBI), it is mandatory for all the credit bureaus in India to offer one free credit report in one financial year.
• Pay bills on time: It is extremely important to pay all your bills on time. Avoid making delayed payments as it negatively affects your credit score. Set up simple reminders to pay the bills on time as this will help you improve your credit score
• Pay all the outstanding bills: Make sure to pay off immediately all the outstanding bills to improve your score. Payment history is one of the factors that is taken into consideration while calculating the credit score. History of delayed payments affects your credit score. Also, avoid paying only the minimum amount due on your credit card. Try to pay the full bill to keep the outstanding amount low
• Do not remove old accounts from report: Do not remove old accounts, deactivated accounts or accounts with negative history from their credit report. Your credit score will be harmed if you remove old accounts that may have a good repayment history. Also, if you have paid your debts, then you should keep them in your report as they will improve your score and also show your creditworthiness
• Maintain a credit utilization ratio: The utilization amount should ideally be lower than the credit limit of a card. Maintaining a low credit utilisation ratio is important to improve your credit score. Higher credit utilization ratio shows that you are overusing your money and will not be able to pay back the balanced amount
You can get a higher credit score if you follow these simple steps. Keeping a track off all the aforementioned steps will help you get a quicker loan or credit card application.
01 June 2017
Are you struggling to repay multiple high-interest loans or credit card balances? Banks and financial institutions offer personal loans to pay off and simplify these debts by consolidating multiple payments and accounts into a single lender and payment. Based on your creditworthiness, you may be offered a personal loan at a lower interest rate saving you money and avoid the hassle of multiple payments. While personal loans attract higher interest rate compared to a vehicle or home loan, they are the best option to streamline your debts and down pay them at a much lower interest rate.
If you’ve chosen a personal loan to streamline your debts, here are top 5 tips for personal loan approval to consolidate debts that you should consider.
• Know Your Credit Score: You can check your current credit score once a year which will give you a fair idea of where you stand
• Pay Your Bills On Time: By paying your bills such as the outstanding credit card balance on time can make a big impact on your credit score. If you are delinquent and go past 60 or 90 days, your credit rating is bound to decrease. Setup reminders to pay those outstanding bills which will help improve your credit score
• Check Your Credit Score: Before you begin the process of applying for a personal loan, check your credit score or credit report. Thoroughly check the contents of your credit rating report. Ensure the details of your credit report are correct and match your payment history and there are no discrepancies. Any error could lead to the rejection of your personal loan application.
• Ensure You’ve Not Availed A Personal Loan In The Last Six Months: If banks or financial institutions realise you’ve availed a personal loan in the last six months, they might be sceptical about your repayment ability. Make sure there’s a gap of at least six months before applying for the new personal loan.
• Choose The Loan Amount Wisely: Don’t bite more than you can chew. From a banks perspective, it’s natural for them to reject personal loan applications which come with a higher degree of risk. Also, ensure you avail the amount that you need to consolidate your debts and avoid taking more.
• Choose The Right Loan Type: Lenders offer secured and unsecured personal loans. Secured loans are offered by putting up a collateral such as your home or land, which can be possessed by the bank upon non-payment of the personal loan. The advantages of a secured loan are that they come with a looser credit requirement, lower interest rate and higher loan amount. However, these can put your collateral at risk. As for unsecured loans, they’re not collateral; however, they rely on your credit rating and the ability to repay the loan. With a higher credit score and interest, unsecured loans come with its advantages and disadvantages.
• Look For The Right Lender: Several banks offer personal loans with different benefits, shop with those banks which will most likely approve your personal loan application. Additionally, review the details of the personal loan offered. Look for details such as interest rate, tenure, and the terms and conditions of loan offered by the lender and compare them other offers.
Debt consolidation by paying off with a personal loan is one of the best options to avoid the hassle of multiple payment and accounts. Ensure you follow the above tips to get the personal loan application approved to streamline your debts.
15 May 2017
Improving your credit score, also known as credit rating, is important as it impacts your ability to avail a loan or a credit card. You can check your credit score and if found to be in a bad shape, you might not be eligible for loans or a credit card. Most lenders and financial institutions use your credit score to approve or decline a loan or credit card applications.
However, there are several ways on how to improve your credit score. Increasing your credit score isn’t easy or particularly quick, but there are simple and effective ways to build your credit score. Here is a simple guide to boost your credit score and enjoy those benefits to live a comfortable life:
Before we get into the steps to improve your credit score, let’s understand what is a credit score.
Credit Score
A credit score is a three-digit scorecard generated by mathematical calculations using information from your credit report including your payment history, the amount owed, credit history length and types of credit utilised. The credit score report is designed to foretell any risks, especially, the possibilities of you becoming delinquent on your credit commitment.
Ways To Improve Your Credit Score
• Know Your Credit Score: You can check your current credit score once a year which will give you a fair idea of where you stand
• Pay Your Bills On Time: By paying your bills such as the outstanding credit card balance on time can make a big impact on your credit score. If you are delinquent and go past 60 or 90 days, your credit rating is bound to decrease. Setup reminders to pay those outstanding bills which will help improve your credit score
• Pay Off Your Existing Debt: Minimise your existing debts and pay off those balances which have not been paid for long. Create a plan to get any debts paid off as soon as possible. It’s a far more satisfying achievement when you realise that you’ve reduced the debt you owe
•Apply For A New Credit Card If You Don’t Have One: While spending through a credit card comes naturally to most of us, it directly impacts your ability to pay. However, if you do pay those balances on time, your credit score is bound to improve. Make sure you have a commitment towards the credit card balance as any non-payment will only lead to lowering of your credit rating
• Don’t Let Your Old Habits Hamper Your Credit Score: Last but not the least, any old habits of delinquency or non-payment of dues will affect your credit score. Make an effort to get away from those habits that lead to a lower credit score
By improving your credit score will enable you to avail a loan or a credit card and will help you borrow credit in the future and reap the benefits of having a good credit score.
09 May 2017
Beginning next week, certain consumers may witness higher credit score. Three big credit reporting companies are now removing all tax liens from credit reports due to revised standards for utilising new and existing public records. This means that certain credit scores will increase by as much as 30 points. Credit scores and reporting plays a vital role as the process can determine the interest rate a customer pays for mortgages, credit cards and car loans as well as whether a consumer get their loan approved. While in July last year, the credit reporting companies removed close to 100% of civil judgement data and nearly 50% of tax lien data from credit reports. Now the companies will eliminate the remaining and changes will be effective April 16, 2018.
12 April 2017
A credit score is a number between 300-900 that is calculated based on an individual’s spending pattern and financial records. A credit score of 750 and above is considered as a good credit score while anything less than 750 is a bad credit score. An individual can get a free credit score from popular credit information bureaus. Credit bureaus calculate credit scores by using their own algorithms. Each bureau calculates credit score in a different way. There are a number of factors that are taken into consideration while calculating the credit score: Here are some of the factors:
• Credit Type: The type of credit: secured or unsecured, taken by an individual is an important factor that determines a credit score
• Credit History: As a credit history consists of all the earlier credit card and loan payment history, it is of prime importance at the time of calculating a credit score
• Credit Exposure: A higher or lower credit score decides an individual's credit exposure. An individual who has low debts and a decent credit ratio will have a higher credit score.
Several other factors including the aforementioned once, are important at the time of determining a credit score. Individuals who have experience in handling loan and credit card for a significantly long period of time are likely to have a higher credit score and vice versa.
26 February 2017
Several credit rating module have emerged over the last 4-5 years. Should career enthusiasts still use credit cards to establish a credit history? Let’s hear from experts.
Arun Ramamurthy, founder at Credit Sudhaar, said “The conventional means of countersigning have still been attractive with regard to any recipes of loaning and a credit history. An individual who holds an outstanding credit score should produce a credit history of several transactions. The decision of money lenders is just not reliant on the category of credit, but also on the profundity of credit.”
He further added “Credit rating modules shall vary from one credit bureau to another, but the credit rating offered by all bureaus will carry the same value across all lines of the financial services industry. The algorithm deployed by credit rating agencies shall usually take into the credit and the loan repayment history of an individual.”
The founder further said “No individuals get long-term financial products like housing loans or vehicle mortgage with a good credit history. To a certain extent, holding credit cards can help people build a credit history, but the combination of credit cards greatly influences the decision of lenders.”
Manu Sehgal, who is a business development leader at Equifax, said “Of course, using credit cards will help people establish a credit score with no previous credit history. Usually, the credit cards, which are offered against a well-established credit history, will have higher credit limits compared the credit cards, which are released with no credit history. Credit cardholders should intelligently make use of credit cards to avoid remitting unwanted fees and charges.”
Amit Kukreja, who is a founder at Wealth being Advisors, said “People use credit cards to buy goods and services with no cash. Each credit card has a credit limit, which is set based on certain criteria, primarily the earnings. I suggest career enthusiasts hold and use credit cards, which are useful in developing a credit history. When used carefully, they can help you get the best financial services. When used negligible, they can be detrimental.”
Experts have urged people to check their credit scores. It can be done online within a few minutes. If you have not checked your CIBIL score still, be advised to run a CIBIL check today. You can also run a credit check offered by other bureaus, but a CIBIL score is preferred. Why wait? Get a free credit score at no cost. Many online portals provide this facility. Should you have any concerns, do reply on this blog and we can guide you obtain a free credit score.
15 February 2018
Yes, you may not have to be well-rated if you are applying for credit cards for the first time. There are many categories in credit cards, which are offered to the people of all-class. Even students can avail the facility of credit cards. Credit card issuing companies issue credit cards to students without looking their previous credit history and credibility. In fact, students cannot produce their banking history.
Without credit scores, credit cards can also be issued to the people who have recently received a job offer. The credit limit for such offers is entirely reliant on the criteria set by credit card companies. A credit score plays a vital role while obtaining long-run personal financial products such as home loans or housing loans, commercial loans, personal loans, vehicle loans, etc. It is considered even while issuing multiple credit cards to a single person.
13 February 2018
