Often on failing to achieve a dream, which we yearn for years, leads to frustration amongst us, isn’t it? One such case is the rejection of loans, which we pin on to achieve our financial goals, by the lenders who sit to choose the best from the numerous applications visiting their desk day-in, day-out. There are many reasons for which an application can be rejected.
However, the first thing that most banks do is to check your credit score before investigating other details. It’s because a credit score speaks of your creditworthiness itself. Like banks, you can also check your credit score online. Now, you would ask, how to check credit score, right?
Checking the score is not a guarantee, though, for an application approval. However, you can at least be clear in your mind as far as approval is concerned. But before checking the score, let’s be first briefed on who provides the same.
Who Provides Credit Scores in India?
There are a handful of companies in the business of generating credit scores and reports to individuals with a credit history. The notable ones include CIBIL and Experian, with the former being in the Indian credit information space more than the latter.
These bureaus generate credit scores in the range of 300-900. If you get a score of more than 750, you can at least crack the puzzle of credit history with flying colours. A score of 700-750 can also help you seal the deal. But chances are that the deal would come with a slightly higher interest rate. There won’t be many takers for scores below 700.
How Can You Check Your Credit Score?
You can check your credit scores at both CIBIL and Experian. In each of the two cases, you need to submit your personal and credit information before getting an opportunity to create a login. The personal information could well be your name, birth date, PAN details, residence address, contact number, etc.
Credit information, on the other hand, would be like your loan or credit card account number, credit limit offered, loan amount servicing or serviced in the past, etc. All these details would then be verified online to take you to the next stage of login. You need to choose a User ID and Password, meeting the desired characteristics, to create your login credentials. You can then login and check your score. One check a year is free, with the subsequent checks being charged ₹500 and more.
How Do Credit Bureaus Generate Your Credit Score?
Bureaus begin to generate your credit scores post the report submission by banks to them on a monthly basis. Yes, banks report every single detail of your repayment, whether it’s about the payment dates, amount of EMI or credit card due paid, the incidence of skipped or late payment, the extent of credit limit utilization, etc. Based on these details, the bureaus sit down to analyze your repayment pattern and figure out a score for you.
Needless to say, a greater credit score indicates that your credit record is good and banks can find it easy to lend you. On the other hand, a lower credit score puts you in a poor light and makes loan approval difficult in your case.
How to Improve Your Credit Score?
You can improve your credit score by following the tips below.
- Pay Dues on Time – You must ensure a timely payment of the loan EMIs or credit card dues by prioritizing your spends. There’s no point continuing with spends you can easily do away with. Remove those from the list of spends and save the needed amount for repayment.
- Avoid Excess Credit Limit Utilization – Avoid the habit of using excessive credit limit of your credit card by controlling the urge for impulsive spends which often is the case with plastic money. A greater credit utilization indicates your urge for more credit.
- Too Many Loan Application within Smaller Gaps – People tend to apply for too many credits and that too within shorter intervals. And if these applications face rejections, better is to avoid apply and wait for some time to get the score notch up.