Jasbir S. Khullar was a very credit friendly person. He was highly concerned about his credit usages and meticulously planned all his financial needs. When he needed an auto loan, he applied to two banks. Due to his high credit score, he was able to take advantage of competitive interest rates offered by both the banks. Both financial institutions wanted his portfolio because of his flawless credit record.
Most people would think only those who are customary defaulters need to track their CIBIL scores to learn ways to increase CIBIL score. But that is a misconception. Experts believe that you must check your CIBIL score at least once a year to avoid any unanticipated shocks in future. The need to avail credit may arise anytime. One must not be underprepared for future financial needs. And that’s why keeping an eye on your score should top your to-do list for finances. Once you follow the score, you shall be able to work on ways to enhance credit score.
Your CIBIL score is a number that summarises your past payment record. Whenever you seek to take advantage of a loan or any form of credit, you approach a bank or any other financial institution. The foremost thing that a lending institution does is to ask for your Credit Information Report (CIR) from CIBIL. In case your score does not fit in the applicable bandwidth, as per the bank’s internal credit policy, there is a great chance that your loan application may be rejected. We know this, already. But what you must also know is that if it fits in their bandwidth, there is a good chance your loan will be passed and you will also be eligible for a lower rate of interest. Isn’t that good news?
Yes! You can gain in every way by tracking your CIBIL score. Well, we can offer more than just one reason on why you must check your score and maintain financial discipline.
- Tracking your loan could help you identify cases of identity theft: Your CIBIL-CIR is a highly confidential report and there is no free access to it. Only if you have applied for a loan or credit card, the bank or other financial institution gets the authority to ask for your report from CIBIL. In short, when you apply for credit, you authorise the bank to check your credit record. Such enquiries are listed under the enquiries section of your CIR. By tracking your credit report, you can identify if any bank or other financial institution has requested to see your credit report even though you have not authorised them to do so. This could indicate that someone is using your information and trying to seek a loan. You can avert any unpleasant incident by being cautious.
- You could spot errors or wrong information in your report: At times, a bank that has rejected your loan application may ask you to contact CIBIL for your report. You can purchase your report from CIBIL and study it in detail. Starting from your personal information like your name, address, PAN Number etc to your employment record, previous loan applications, status of such applications, payments made, amount and all other related details are recorded in the report. The report will also indicate areas that are adversely affecting your credit score. Once you have identified an error in your report, you can raise a dispute and get it rectified. . This will help improve your score. But if you are not tracking your credit score then you may not even learn about any such discrepancies and might lead to a delay in getting a loan sanctioned.
- Will asking for my report too many times affect my score: Well, no. It is your report and you can check it whenever you want. However, every time you want to check your report, you must purchase it from CIBIL at a cost. It is advisable that you must check your report at least six months before you apply for a loan. This is so that you can prepare for it in advance. Rectifying errors and reflecting changes can take 30 to 45 days. If you are not planning for credit in the near future, you must check it at least once annually.
- Tracking can help you maintain a healthy record: A better credit score could mean lower interest rates. Although you could be in the “good” score category, you can work towards making it an “exceptional” score and then take advantage of lower rate of interest. Banks like to retain and grant credit to those who have an outstanding payment record. Therefore, they are willing to offer a lower rate to such patrons.
- Like the developed countries: There is a gradual shift in momentum and just like the developed countries, soon telecom companies, insurance companies and even your prospective employers may begin to check your CIBIL before doing business with you. Thus maintaining your score will be a more important responsibility in future.
Your credit score is a synopsis of your creditworthiness in a three digit number. Make it a regular practice to plan your finances bearing in mind the impact that it will have on your score.
Start early, Plan today.
Happy credit to you!!
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