If you’ve ever applied for a loan or
a credit card, you would know that banks and other financial institutions ask
you for your credit score. The credit score, also known as the CIBIL score, is
a very important factor when it comes to determining an individual’s
eligibility for a credit facility. The CIBIL score range starts from 300 and
goes all the way up to 900. Here, 300 is the lowest credit score that an
individual can have and 900 is the highest. Generally, financial institutions
require a credit score of at least 750 or more in order to be eligible for a
loan. ये भी पढ़ें - अपने राज्य / शहर की खबर अख़बार से पहले पढ़ने के लिए क्लिक करे
If you’re wondering how to check credit score, you’ll be glad to
know that there are multiple service providers who offer the service for free.
And considering the importance of the credit score, here’s why millennials such
as yourselves need to check your credit report regularly each month.
Why should you check
your credit report regularly?
Wondering why you should check your
credit report each month? Here are some key reasons why you should do it.
1.
To determine your creditworthiness
Although every
individual should make it a habit to check their credit report each month, it
is the millennials who need to do it diligently and without fail. The reason
for this is that millennials and younger generations tend to embrace credit
cards and loans, both of which can impact their credit worthiness. By checking
their credit reports each month, they can constantly stay on top with respect
to their creditworthiness.
2.
To detect errors and mistakes quickly
Although the credit
reporting and monitoring system in India is robust and less prone to errors or
mistakes, there might still be a few that might escape the stringent system. For
instance, there could be a mistake in the details of your credit facilities,
omissions in the credit repayment details, mismatch of personal information, or
unauthorised credit score enquiries.
In any of the above
cases, your CIBIL score range is what would get affected
first, which can ultimately lead to rejections when you apply for a loan or
credit facility. Here’s where constant monitoring of your credit report can
help you out. Now, when you witness an error or a mistake on your credit
report, you can immediately bring it to the notice of the concerned authorities
and get them rectified as soon as possible. However, that would be possible
only if you checked your credit report each month diligently.
3.
To keep an eye on various other aspects of credit
scores
This is another
major advantage that you get to enjoy by checking your credit report regularly
each month. There are certain factors that go into the determination of your
credit score like the Credit Utilisation Ratio (CUR) and credit mix. These are
crucial information that credit bureaus use to determine your CIBIL score
range.
The CUR basically
tells you just how much of the credit limit you’ve utilised up until a point in
time. For instance, if your total credit limit is Rs. 10 lakhs, including both
credit cards and loans, and you’ve utilised Rs. 5 lakhs, your credit
utilisation ratio would be 50%. The higher the credit utilisation ratio, the
lower your credit score is likely to be.
And similarly, the
credit mix tells you the kind of loans that you’ve been opting for. Ideally,
your credit mix should consist of both unsecured and secured forms of credit in
a reasonable proportion. Having too many unsecured forms of credit can
drastically bring down your credit score.
By checking your
credit report each month, you can consistently keep an eye on these aspects and
ensure that it stays within the recommended limits.
Conclusion
Now that you know the importance of
checking your credit report each month, go ahead and get yours right away. If
you’re still wondering how to check your credit score, you can simply visit the
website of any one of the 4 credit bureaus in India - Experian, Crif Highmark,
CIBIL, and Equifax and avail a free credit report. Alternatively, you can also
visit the website of your favourite online financial portal to know what your
CIBIL score range is.
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