There are increasing instances of individuals with good credit score getting benefitted with better deals on loans and credit cards. For instance: ICICI Bank has started using a curated algorithm to pre-approve 100% on-the-road car loan financing for its customers who are creditworthy. SBI charges a lower percentage of interest on its loans for individuals with good credit score. Therefore, the importance of a good credit score cannot be overemphasized.
Additional Reading: Is credit score affecting the quality of your life?
The awareness of credit score is also increasing among Indians.A survey conducted sometime in 2016 showed that only about 15% of the respondents in metros were aware of credit scores, whereas a recent survey conducted by CreditMantri showed 64% of our respondents checking their scores within a 0-6 month period.
Yet for the benefit of our readers, we present to you the ways in which you can track your own credit behavior and how to be in control of it.
What is a Credit Score and How Important Is It?
A credit score is a numerical representation of your past credit behavior and an indication of your creditworthiness to the lenders. The number ranges between 300 and 900. Higher scores indicate higher grades of creditworthiness. In India, credit scores are issued by 4 credit bureaus namely Equifax, CIBILTM, Experian and CRIF High Mark.
Credit scores are checked before approving any kind of credit. A good score goes a long way in getting not only your application approved but also credit/loans at competitive rates. A less percentage of interest means the less amount paid on interest and more savings during the tenure of the loan.
You would be surprised to know the increase inthe number of employers that are looking at your credit scores before offering you a job. This was a norm in industries like telecom, banking and insurance, credit rating agencies, and for jobs with regulators such as Sebi and IRDAI. However, with the increasing popularity of credit scores, more and more employers are viewing your credit scores. Repeated defaults on payments of loans or credit card bills are not only construed as financial indiscipline but end up having a bearing on your overall personality.
To avoid getting into situations like that, you must be in control of your credit score. This is possible only when you can track your credit behavior
How Can You Track Your Credit Behavior?
Tracking your credit behavior will give you useful insights into where you have been going wrong and how you can set it right.
Your credit behavior is represented by your credit score. A credit score is a representation of many of your credit activities like:
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Your borrowings
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Repayment history
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Credit utilization ratio
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Your credit mix
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No of hard inquiries in the previous year
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Portfolio Age
Where Do You Track Your Credit Score?
You have two options for checking your credit scores. It could either be done with the credit bureaus where the scores are generated or with fintech companies like us.
How do you Check your Credit Score with the Credit Bureaus?
Credit bureaus calculate your credit score based on your past behavior on the abovementioned factors. As the scores are calculated by these bureaus, you can check your credit score on the websites of these bureaus. However, they do not come for free. The credit bureaus offer membership programs for various tenures for a fee. You can choose a tenure based on your requirement.
To bring in more transparency and to provide individuals an opportunity to know their credit scores, the Reserve Bank of India has mandated that every individual should get an opportunity to check to his/her credit score and credit report once a year free of cost. You can check your scores either on the websites or on their apps. You would need any one of your identity proofs, like PAN, Aadhaar, Driving License, etc. to be able to do so.
However, you should keep in mind that each of the credit bureaus have their own methodologies to compute credit scores. That is why, your credit score may not be the same across the bureaus. So, it is good to be consistent and check your score with a particular bureau each time so that you can track it better.
Additional Reading: Why does my credit score differ across credit bureaus?
How do you check Your Credit Score with the Fintech Companies?
One year is definitely a long time to wait for your next credit score. There might be many occasions when you need to avail credit and check your credit score before applying or would want to improve your credit score. At that time, if you get an option to check your scores periodically, that proves useful.
That is when Fintech companies like us help you track your credit score! You can check your credit score any number of times here. And don't you worry, it would not be counted as a hard inquiry.
If you have a low credit score and are unsure of how to take corrective action, you can check out our Credit Improvement Service. You could alsosubscribe for a credit report at our site. This report will give you a detailed analysis of your credit score with reasons for low score and how you could work on improving the same. Do check it here
You could make use of the pre-approved offers available on our site for various credit products for different ranges of credit scores as well.
Key Takeaways
To remain credit healthy, it is good to track your credit behavior or monitor your score at least once in 3-6 months so that you have enough time to take corrective action, if needed.