A credit score is an integral part of the financial health of a consumer. It can help in borrowing loans, credit cards etc. There is a necessity to maintain healthy credit score as all the lenders first check your credit score before lending any money. According to the survey, Indian consumers living in urban areas are much aware of regularly checking the credit score as compared to the rural Indians. This survey shows that attention to credit varies demographically in India. Young urban adults are among the most credit-vigilant in India and nearly 49% adults ages 18 to 24 years old who ever check their credit scores do so primarily in order to improve their scores, compared to a mere 20% of those ages 45 and older. There is a need arises to create awareness among the people if the borrowers know that the score is a key parameter and way to improve it, they will be more keen to know. Understanding of credit report is also very important.
You should understand your credit report, some of the points are:
Your credit report
A credit report is a detailed history of your loans and credit card. Credit bureaus collect information from various sources like banks, NBFCs, credit card company to create your credit report. The Credit Information Bureau India Ltd is popularly known as CIBIL. It is the authorized credit agency of Reserve Bank of India (RBI). A CIBIL score is a three-digit number ranges between 300 to 900.
You can get it free
You can get free, many online aggregator and bank provide a free credit score. Even Reserve Bank of India (RBI) has mandated that all the credit information companies should provide at least one credit report to its customer in a year which must be free of cost.
Your credit score
Credit score ranges between 300 to 900 and 750+ consider as a good score. One more important thing is the higher the score, the lower is your risk profile and easier for you to get a loan.
Tips to maintain credit score:
Check CIBIL score on a regular basis
You should review your credit report regularly and check for any inaccuracies in the report. If you find any inaccurate data, report that error on the immediate basis.
Avoid over limit credit utilization
You should maintain your credit ratio, overutilization can create bad impact on CIBIL. This ratio represents how much credit you use out of your available credit limit.
Pay your due on time
Always pay bills and all your dues on time because it generates credit history. If you didn’t do so this will affect your credit report. One more thing you should understand is paying only a minimum balance every month can increase the amount of interest paid, which may have a negative impact on your credit score.
Never settle any loan or credit card
Many people opt settlement of loan or credit card if they are not able to repay the loan amount. Settlement of a loan amount is borrower ask for a deal that will allow them to close the debt for an amount that is lower than the actual amount due. Loan settlement badly affects your credit score.