By continuously monitoring your credit score and report, you can avert unnecessary issues which could deter your loan approval.
Ranjit PunjaIf you have clicked to read this article then you probably know what a credit score is and how important it is to maintain a credit score. But, for those who are new to credit, here’s a two-line crash course.
Your credit score is the numerical representation of all your credit activities. While applying for credit, it plays a key-role in your loan eligibility, interest rate and tenure.
Simply put, your credit score represents your credit worthiness and a good score ensures better loans, failure of upkeep would represent damaged credit history and lead to loan and credit card rejections.
Lenders aside, your credit score gives you a fair understanding of where you stand with respect to credit and obtaining a credit report would be the first thing to do before applying for new credit.
That brings us to the question, how often should one check your credit score?
As a user, you can check your credit score as many times as you want which is known as a soft credit score check, all the credit bureaus in India are mandated by the Reserve Bank of India to provide one free credit report annually.
So that makes it a minimum of one credit check per year.
But what are the benefits of consistently checking your credit score?
#1. Know Where You Stand
Your credit score is a tool that helps you assess your credit situation. Frequent checking will give you a clear picture of where you stand with respect to your credit behaviour. This will enhance your financial planning to maintain a healthy credit score.
Your credit report contains all the essential information regarding your account and credit repayment behaviour. It allows you to monitor all your monthly payments and helps you take immediate action towards any discrepancies.
#2. Dispute Resolution to Remove Errors
To err is human! But errors can be rectified.
Banks report your credit details to the credit bureaus monthly and there could be errors while updating the credit data on your report.
Errors such as wrong personal information and account details, incorrect update on the payment history and discrepancies in the calculation of credit score could be found on your credit report. On noticing such mistakes, you can initiate a dispute resolution with the respective lenders and get it corrected immediately.
#3. An Opportunity to Fix Your Credit Health
It might be puzzling sometimes when your loan application gets rejected despite a steady income. Checking your credit report would provide you an opportunity to know whether you have any negative accounts and outstanding balance. By fixing up your past mistakes, you can become credit healthy and enjoy quick loan approval in the future.
#4. Check on suspicious inquiries
There are instances where unauthorized inquiries are made for accessing your personal information. Though some of them are legitimate, you must be aware of those entries on your report. These hard inquiries mentioned in your report could affect your credit score and loan eligibility. In such a scenario, you can raise a dispute resolution with the credit bureaus and get it corrected.
#5. Become eligible for best offers on credit cards and loans
We saved the most useful insight for the last. Continuous monitoring of your credit score will inform you of the progress you are making with your credit health, and put you in a better negotiating position with lenders while applying for loans and credit cards.
By continuously monitoring your credit score and report, you can avert unnecessary issues which could deter your loan approval and keep you on track towards a credit healthy life.
Make sure you use these insights to your advantage and make the most out of checking your credit score consistently.(The writer is CEO of Credit Mantri)