If you have a higher credit score, you can also negotiate for better interest rates on loans
Opting for the loan moratorium would not affect your credit score. However, it’s important you keep a track on your credit score and check for any errors, especially if you plan to apply for a fresh loan. Here is how you can get a free credit report and keep track of your scores.
How many free credit reports can I get in a year?
In India, we have four credit bureaus: CRIF High Mark, Equifax, Experian and TransUnion CIBIL. As mandated by the Reserve Bank of India (RBI), consumers are entitled to one free credit report every 12 months (calendar year) from each credit bureau.
Any extra report that you wish to take comes at a cost. CRIF High Mark and Equifax charge Rs 399 and Rs 472, respectively for each new report. TransUnion CIBIL charges Rs 550 for one month and Rs 1,200 for one year, with unlimited access to credit reports.
However, Experian is now providing free credit reports throughout the year. “This initiative is taken by our credit bureau in these pandemic times to educate consumers and they can access their credit report every month to check for any discrepancies,” says Sathya Kalyanasundaram, Country Head & Managing Director, Experian India.
Do I need to submit any documents while asking for a credit report?
No, you don’t require any documents while applying for a credit report online. You may have to create a login account in the bureau’s website. Further, your permanent account number (PAN) card, date of birth, residential address and any identity number (PAN card, passport, driving licence, voter ID, etc.) may be needed.
In case, you are applying for a credit report offline (by post / courier) than you will have to enclose a demand draft in favour of the credit bureau. The other documents are the credit report request form, self-attested copy of any personal identity and address proofs.
How can a higher credit score help me?
A high credit score reflects a good track record in repaying loans – banks and non-banking finance companies (NBFCs) prefer higher scores. Gaurav Gupta, co-founder and CEO of MyLoanCare says, “If you have a higher credit score, you are entitled to receive preferential pricing. You can also negotiate for a better rate of interest on loans.”
Bank of Baroda, Union Bank of India and Syndicate Bank among others have adopted risk-based pricing for floating rate home loans. It is a system of offering credit at a rate depending on the customer’s credit score.
Does credit score alone determine whether I can get a loan from a bank?
No. The lender's primary objective is to determine whether you are a good or bad credit risk. “Your credit scores are only one of the factors used to assess your credit stability and ability to pay back a loan. Lenders look at your overall financial profile,” says Kalyanasundaram. Your credit history, payment history, income and overall present financial situation are also considered.
I do not yet have a credit score with any bureau. Why?
That’s because you may not have any credit history. In other words, if you have not used a credit card or serviced a loan till now, you may not have acquired a credit score. Second, if you have not borrowed in the last ten years, your credit history gets too old to be assessed.
How often should I check my credit report?
If you are planning to apply for a loan in the near term, then you should check the credit score at least once a year. If you are working to build or rebuild credit, then you should be looking at the credit report about once a month so that you can monitor your scores.
Also, you can detect any signs of identity theft / fraudulent activity early.
There are inaccuracies in my credit report. How can they be rectified?In case you spot any inaccuracies in your credit report with respect to errors in your loan account, old personal information (name or address), opting in or out of loan moratorium, etc., you should immediately raise a dispute with your credit bureau with details or send an email. Generally, the turnaround time for resolving disputes is a maximum 30 days. There are no charges for resolving disputes in the credit report.