Why you should check your credit score regularly?

• Why You Should Regularly Check Your Credit Score?
• Review Your Credit Score
• Here is why it is important that you keep a close vigil on your credit score
• Here are the 4 main reasons why you should get your credit score checked up month on:
• How often should you check your credit score, and why does it matter?
• Conclusion

Why You Should Regularly Check Your Credit Score?

Think of your credit score, that three-digit number, as your financial report card. With a score of 750 or above, lenders will quickly approve your loan with low interest rates. Most people only ever check their credit scores after getting denied for a loan, a point at which it might take months to correct errors and rebuild credit. Thus, routinely checking your score may be one of the easiest and most beneficial financial habits you can adopt.

Review Your Credit Score

You may believe that you only need to review your credit profile when you apply for new loan. Contrary to this popular belief, your credit score is dynamic and can go up or down on a month-to-month basis depending on how your payment behaviour, usage of credit cards and number of dues reflect in your credit bureaus report card.

Here is why it is important that you keep a close vigil on your credit score

Saves a fortune of money in interest expenses: Generally, lenders give better interest rates on the same loan, when the customer poses a good credit score. If it were the long haul-say a 20-year home loan-an interest rate increase of even half a percentage point will cost you lakhs of rupees over the time period.

Gives you enough leverage to get a good deal: A credit score of 780 is high enough to give you good bargaining power with your lenders and allows you to demand a minimal processing fee, a loan with high limit and quick approval time.

Protects you from unforeseen inconveniences: So, your ideal house has been finalized, the negotiation was excellent and a token amount has been paid to the owner and then your application for home loan gets rejected because a month ago, a small bill of Rs. 500 was not paid in its due date 2 years ago.

Keeps your reputation untarnished: Credit bureaus receive information and update your reports with credit institutions monthly-so consistent inspection on your credit report can help you maintain an updated account of payments and settled loans in your favour.

Here are the 4 main reasons why you should get your credit score checked up month on:

1. Rectifies the reporting errors before it catches up with you: On a monthly basis, financing establishments send out transactional data of millions of people to the credit bureaus. Due to similar names, typos in PAN numbers or delays in updates, errors in the credit reports can happen at more frequency than you might think. A loan may look active even after closing it a few months back or the outstanding amount may actually relate to some other fellow with similar PAN. Monthly check-ups will let you know of those discrepancies and help you to fix these on time; otherwise, it'll drag down the score considerably
2. Detects identity theft and loan frauds early: Instant loan apps and quick loan applications have unfortunately made hacking your PAN and Aadhaar more prevalent than ever; thereby compromising your identity for loan fraud. A clever fraudster can even take tiny loans on your behalf or purchase various products on EMIs, thus putting your money at risk. By checking your credit report regularly, it will allow you to notice such anomaly without much delay and report it to the required authorities, allowing them to take immediate action and cease the fraudulent activity.
3. Keeps track of your Credit Utilization Ratio: Finance experts claim that one must avoid utilizing more than 30% of your available Credit Card limit over the month. Suppose, if you are using Rs. 70,000 out of Rs. 1,00,000 combined credit cards’ limit per month, then credit bureaus may believe that you are credit dependent. However, it can prove beneficial for you to track your usage and keep credit utilization ratio as prescribed for higher scores.
4. Cultivates financial discipline: Much like watching your weight is crucial when looking to hit a fitness goal, taking care of credit score also develops better saving and spending habits. Once you see your score go up from 680 to 760, as you maintain a clean repayment record, you’ll surely be feeling proud and motivated to keep maintaining those responsible financial practices.

How often should you check your credit score, and why does it matter?

You ought to check your score of credits once a month. Credit bureaus get credit card issuer's repayment details once a month, hence they update the credit score once around 30-45 days, i.e., once in a month.

Any time that you want to know about the actual credit score or credit reports yourself, it is known as a soft pull. With a soft pull, the effect on your credit score is nil. Hard pull may have a bad influence when applying for a loan.

The lender takes this hard pull on your credit reports.

Many hard pulls taken in short spans of time result in low credit score.

There are some tips listed below for maintaining a credit score of 750 and above:

• EMI/ Credit card bills on time: Your score directly depends on it. It is critical to pay back on time always.
• Build a good credit mix: Aim for a balance of secured and unsecured loans to reflect your prudent approach.
• Apply with minimal lenders: Too many loan / credit card applications in a short time period lowers down score.

Conclusion

Your credit score is much more than just a few numbers which determine loan success- it will even bring you independence on monetary front. Spend couple of minutes checking your credit score each month so that you can get meaningful insights, can remain secure from theft and fraud, can secure future for major financial dreams.

Therefore, it is recommended to routinely check up on your credit score once in a month, and in times of your future big financial endeavours it’ll be your strongest companion.

Planning to apply for a loan or new credit card soon? CLICK HERE to check your latest CIBIL score now to see where your approval odds stand.