Your Credit Information Report (CIR) is just like a report card for your financial health. It contains your details such as credit history, including details of loans incurred and repayment patterns followed. A CIBIL TransUnion Score in CIR basically denotes summary of credit report. It indeed defines your credit worthiness and makes you eligible or non-eligible to advance loan for future. Thus it is paramount to maintain a good CIBIL rating and secure future of your family.
Owing to the great value of credit score, there are several frequently asked questions and myths related to CIBIL scores. Here in this article we will take up FAQs regarding the inquiries on your credit report and how does they affect your score.
Whenever anyone seeks out information regarding your credit score from the CIBIL, it is considered as an enquiry on credit report. The detail of enquiry is noted down by CIBIL every time on your CIR. However certain inquiries are considered soft enquiries and are not noted down on your report.
Soft enquiries are the ones that are made for general purpose, other than enquiry for credit history. For example, when you check your own report using your CIBIL consumer Login, or a bank inquires for a pre-approved credit card or when a company seeks out your CIR as a means to back ground check for a job. All these checks are considered as soft inquiries and would not affect your scores.
Hard inquiries on the other hand are the ones where a bank or a financial institution checks your CIR as a result of your application for a loan or credit card. The purpose of hard inquiries is solely to ensure status of credit worthiness. Thus these inquiries are always inscribed on your credit reports.
Every hard inquiry suggests that you want to borrow a loan. When several banks or lending institutions make multiple inquiries in a short period of time it directly indicates that you are credit hungry and under dire need of funds. Thus multiple hard inquiries may suggest that you are not financially sound anymore.
It is thus prudent to not fill loan or credit card applications to several banks at the same time. You need to be wise enough to not start trail of credit checks unnecessarily. Too many hard inquiries can ruin your credit score by 10 per cent. Falling score would drain the credit worthiness further.
Always be vary of queries made on your CIR. It is advisable to check your CIR twice a year and monitor all soft inquires and hard inquiries on the report. If you come across any unknown inquiry on the report, beware of the financial threats such as identity theft. It should not be left unchecked by you. You should immediately raise a CIBIL dispute to investigate this matter. No bank or any third party should check one’s credit information without their consent.
A breach in your financial privacy by checking credit report could be a clear indicator of a third person intrusion to use your name and details for credit. This could land you in the big scam where you would end up owing a huge loan on paper and there would be no way to prove the con. Thus you should always keep a strict check on updates of your credit report.
Besides banks and credit card companies, following parties could also begin a check on your CIR for certain purposes.
- When you want to rent a car, home or apartment, a back ground check may require credit check.
- When you open a new bank account, your CIR will be checked.
- When you get a new phone or cable service, sometimes they run a check on your credit history.
- Some jobs require credit check as well.
These inquiries however do not affect the score as they are primarily a part of background check. Only the inquiries related to your credit status are considered as hard inquiries.
As you now know how credit inquiry affects your CIBIL score, you can certainly limit the hard inquiries on your CIR. It is better to make a soft inquiry yourself before asking the bank about the eligibility for home loan or credit card. After all you want to keep your score intact in all situations.