credit score check

Is Credit Score Check Necessary Before Applying for a Loan?

Kishan Sharma is a 40-year old Senior Mechanical Engineer in a manufacturing firm. One day, he felt the need to buy his own home to get relieved from the hassles associated with a rental accommodation.

In his 15-year professional journey, he had to switch his residence for about 20-25 times, causing anguish among him and his family members. So he applied for a home loan at XYZ bank. But what followed next was even more annoying for Kishan as the bank rejected his application on the grounds of poor credit history. Yes, you read it right!

He was holding a credit card and due to overspending, the bill amount used to be way beyond his ability to repay on time. And so, he kept paying the dues late month after month and which resulted in lowering his credit score. He didn’t check his score before applying and so was surprised with a rejection. Taking a lesson from Kishan, you can do a credit score check to know your worth of the credit you want to avail.

How to Do a Credit Score Check?

You can check your credit score on the official website of CIBIL, India’s top credit information company. Firstly, you need to do a simple registration by mentioning your personal and professional details, as well as information pertaining to any loan or credit cards running or have availed in the past. Subsequent to a successful registration of the details, you can create your account by selecting a User ID and password. So when you log in with such credentials, you can check your credit score.

How Does CIBIL Determine Your Credit Score?

The way you service a loan or credit card goes a long way in establishing your credit worth. So, you need to be watchful of your credit behaviour. Banks send the credit-related information like the credit limit utilization, types of credits availed by the customers, the repayment track of loan EMIs and card dues, loan settlements, among others, to CIBIL on a regular basis.

CIBIL, in turn, does a thorough analysis of these details and prepare a matrix for each individual. The matrix not only helps CIBIL award credit scores but also prepare a detailed credit report, depicting the financial health of an individual. Reading the whole report can give you a clear idea of what’s happening on your financial front. In many ways, it will help you draw a roadmap to attain a position where you can be eligible for a credit from the financial institutions.

How to Achieve a Good Credit Score?

So often one falls into the trap of overspending and goes on to impair his/her financial life. If you spend in a haywire without proper planning, chances are that you would end up leaving with not much at the end of the month. And if you are servicing any debt, you may find repayment overbearing on your limited budget. This may force late payments and when the pattern becomes a regularity, the credit scores take a hit. This, in turn, deprives you of any loan or credit cards that you would like to have in the future. But every problem has a solution. And if your situation is the way described in the above lines, you need to follow the steps below to steady your credit situation.

  • Prioritize your spends by keeping those, which are your needs, at the top of the list
  • Use discretion while spending on things other than your needs
  • Avoid applying for too many credit cards at the same time
  • Don’t opt for settlement just bcoz the repayment amount shortens doing so. Availing this option can lower the score considerably
  • Use credit cards judiciously so as to pay the dues in full.
What is a Credit Score?

A credit score is a report card of an individual’s credit behaviour. Normally, the credit scores range from 300-900 in India, with anything above 700 is a plus for the prospective borrowers.

So, guys like Kishan Sharma and you can take a cue from this article dedicated to Credit Score Check, in order to maintain a strong credit history. This will help gain a hassle-free approval for the loans you may seek in the future.

 

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