Be it the good old school days or the ongoing job life, you are reviewed day-in, day out. In the school days, your quality was judged mainly on the scores you used to get in your tests. Come to the job life, your performance is reviewed by your boss in terms of your knowledge, efficiency in delivering critical tasks and much more.
All these parameters go in to decide your score. Similarly, when a loan application reaches the bank desk, every single detail of your past or ongoing debt repayment record is checked to eternity to give you a credit score that becomes the standard of your creditworthiness.
Tons of applications come and get rejected on grounds of a poor credit score, with a very few getting accepted by the lenders. This only tells you the importance of a credit score in determining your eligibility for a loan. With a lot of TV ads being aired these days regarding credit score, a lot of inquiries have cropped up. So, Free Credit Score India chant is getting louder by the day and will continue to be so in the future. Let’s get into it now.
Where Can You Check Your Credit Score?
You can check your credit score at several credit information companies busy generating the same. The companies include CIBIL, Experian, Equifax, etc. To check your credit score, you shall visit the website of each of these which you may like to.
Well, the process may differ in bits but more or less would remain the same. Yes, you need to first register yourself by giving the details of your personal and credit life. After you enter all these details, the next job is to create a login, which you can do by choosing a User ID and Password meeting the requirements as notified.
Then, it’s all yours, just log in and check the score. You can check the score free once a year. More than that will lead to a charge of ₹500 and beyond.
How Does The Score Arrive?
Credit bureaus generate a free credit score after getting your repayment track and several other details from banks on a month-on-month basis.
Repayment track would include the date on which the payments are made, any late or skipped payment instance, debt settlement, etc. Based on these details, the bureaus what they do is to chart a matrix and assign a credit score for you. A good repayment record would keep your score higher compared to those with a dodgy record.
Why Does The Score Go Down & Ways to Improve It?
Your score can go down owing to sins you may have committed in your past debt or are committing in the existing one.
#1. Delayed Payment of Loan EMIs or Credit Card Dues – The loan EMIs or credit card dues need to be paid on time to prevent the unwanted blots to worsen your score. Untimely payment can be due to the lack of discipline as far as spending is concerned.
Spending more than your limit can always leave you with an amount lower than what’s required. So, control your urge to spend beyond your limit or rather re-assess your limit particularly when you are servicing a debt.
Deduct the repayment liability from your monthly income first to arrive at an amount which actually is your effective income. Afterward, you decide an amount of spending that you can make and yet repay smoothly.
#2. Bump Out Credit Limits – Using excessive credit limits can lower your score considerably. Make sure to keep the credit utilization ratio to below 50% of the limit offered on a credit card.
A massive utilization does create an impression that you are hungry for credit. So, you need to control that urge for impulsive spends which often is the case with credit cards.
#3. Debt Settlement – When the debt piles beyond the ability to pay, one often decides to sign a debt settlement agreement with the lender. So when the request does arrive, you and your lender sit down to cut down the size of debt as much as possible.
With this, the debt reduces but the label of settled gets written in your credit record. So when you approach a lender for a fresh loan, you may hear ‘No’ as the credit score goes down rapidly by exercising debt settlement.