You must have heard the Gyan gurus preaching that you should regularly check and improve credit score. They tell you about numerous reasons why your credit score is an important number in your financial life and why is it necessary to keep track of it on a regular basis. But you must be wondering how often you should be doing that! Well, the answer depends on some factors mentioned below.
There are many unscrupulous people out there who could steal your identity and take advantage of your carelessness. If you ever receive a mail regarding a credit card you did not open, or you see a transaction on your card that you did not make or you got a collection call for someone else then you should immediately check your score and report to see if there is any fraudulent activity going on in your name. Check all your accounts to verify that they belong to you. People who do not check their score leave themselves open to the risk of misuse of identity where their credit limit gets maxed out without their knowledge. By the time they find out, it’s too late and there is nothing they can do to improve credit score.
If you are planning to take a home loan in the near future, it is a good idea to check the score and report 3 months before you file an application. It will show you whether you are likely to qualify for the loan or not. If you uncover any errors in the report which are bringing your score down you will have time to get them rectified. If your cibil score is not up to the mark you will have sufficient time to take steps to improve credit score. Even if your score is an average one, we would recommend you improve credit score before filing an application so that you can bargain for a low rate of interest. In case of a home loan which stays with you for more than 10 years, even a 0.5% difference in interest rate can help you save thousands of rupees.
If you are planning to buy a car and finance it through an auto loan check and improve credit score before applying for loan. Car lending rates also depend on the credit score. If the lender is charging you an outrageous interest rate you would know whether it is justified or not.
If you are planning to improve credit score and are taking specific measures for it, it is a smart idea to check you score every three months to see whether your efforts are bearing fruits and whether you are moving in the right direction.
Credit card companies and lenders update the bureaus with the information about your accounts every month. Hence the credit score will vary on a month to month basis depending on the loan account information fed into your report. However do not get paranoid and check your score every day. Small day to day changes are not of any importance. Do not worry about those fluctuations when you are trying to improve credit score. What you need to look at is a general change in trend over a period of at least 3 months.
If you do not for see any need for a loan in near future and none other reasons apply to you then checking your credit score and report once a year is good enough. It will help to keep a check on whether you’ve been diligent with all your payments or not. If you see a major change in the credit score, you should study the report in detail to identify the reasons for the same. There may be some payments that could have slipped out of your mind. Payments delayed beyond a period of 90 days bring a big dip in the credit score. A self-assessment done once a year will help in getting the focus back on mending any careless attitude that you may have had towards your finances.
So check your report at least once a year to make sure that your credit is healthy. Identify the problems before they become too severe to treat.