Whenever you avail credit facility the lending agency asks “whether you have taken any loan in past or having a credit card”. Do you know why do they ask this question? This is because tracking your past record they take the decision whether or not to approve your application. Want to know how they get through your previous credit transaction? Let’s unveil this mystery.
In this article, we will focus on what is credit score, how is credit report prepared and by whom. Also, we will discuss who can check the score and how to check the CIBIL score free.
Often you would heard lending institution say, “Ma’am, your application can’t be processed as you don’t have the required credit score.” And you get flat what is score all about? This score is the 3 digit number that indicates your credit behaviour. High score means that you have maintained your credit health and paid the credit bills and loan EMIs on time.
However, if you default in making credit payments on time then your score graph declines. The score of new applicants is also low as there is no record available for them. The idle score 750. It indicates that you have paid all your debts on time and not defaulted. The score is calculated based on the credit report.
CIBIL report is the detailed document that consist the details of all the credit transactions that an individual has made. The report is prepared even for the non-individuals (i.e. business firms and organisations). This report is prepared by the Credit Information Companies. In India, there are four Companies namely – CIBIL TransUnion (fullform Credit Information Bureau of India Limited), Experian, Equifax and High Mark.
These Companies collect the information from the Banks about the transaction made by an individual. The Banks submit the individual’s credit related transaction details to these Credit Information Companies. According to the information received, the Agency prepares the report.
Each payment you make or skip is recorded is considered while preparing the report. The report includes details of new loan applications, interest rate, credit limit on card, the status of all loan accounts including those ‘written-off’ or ‘settled’ or ‘closed’.
After analysing the Credit Information Report (CIR) statistically, the score is computed. The report prepared by all four Credit Bureaus is similar and there is no change in the score. So, if a new lender wants to know how is the applicant maintaining his existing loan and credit card payments, they can easily access the same. This help the lending agency know the creditworthiness of the individual.
The CIR can be availed by anyone. It is not necessary that only lending agency can check your CIBIL score. If you want, you too can get your credit health check up. For that, request for the CIBIL report at any of the Bureau. Login the official website, submit the documents and you will receive the CIR on your mail ID within 2-3 days.
You can also get the CIBIL Score Free check-up without engaging in the hectic process. How? At Wishfin. Here you can check your CIBIL score without providing any document by just entering the PAN Number. You will get the results instantly. Also, the report will be mailed to the e-mail ID you have mentioned.
Though one should get the credit health check-up, checking the CIBIL frequently hamper yours score. If you check your score regularly, then it is negatively affected. Also, applying for the loan at various lenders and posing queries at various Banks hits your score. This is because every time you apply, your credit history is checked by the lender.
Also, if your loan or credit card application is denied at one place due to bad credit score then don’t apply again at least for 6 months. Instead try to improve your score by paying your Debts on time. Pay your EMIs and credit card on time. This will boost your score and increase your creditworthiness. Which, in turn will you get fresh loan easily.