Why do I need to check my credit score on a regular basis? Isn’t that the job for banks or any other financial institution when I apply for a loan? I am not planning for a financial product anytime soon, so why should I? What’s in it for me? This is the perception of almost everyone when it comes to checking their credit score.
Is this perception right? Absolutely not! Consider at time of an emergency, when you think of taking a personal loan and the process getting delayed because of your low cibil score or even get denied, what would you do? It is always suggested to get the rating checked on regular intervals to avoid such problems.
Here is why you need to monitor your credit score on a regular basis,
To know where you stand
As we all know cibil score is a three digit number which is used by the bank to consider giving you any type of financial product like loans, credit cards etc. when you check your score, you will be able to determine where you stand and how is your credit health. Is it low, average or high, if low you can start working on the same and try building a good score because when the time comes your loan taking process will be smooth and easy.
Make sure your credit information accurate
When you try checking the score, you will not only be able to see how much your score is but also will be able to see all your loans, accounts and credit cards. If you see any other information which is not yours and that particular account is causing your score to go down, you can immediately report it to the credit bureaus.
Get insight into what actions hurt and help your credit score
Imagine you checked your score three months back and then the score was good to go. Due to some financial difficulties you did not make the payments on time and end up being in the loan defaulter list now when you check the report there is a huge decline in the score. By checking your report on a regular basis you can easily analyze where you went wrong and how you can cope up with the scores in future.
Prevent identity theft
This happens a lot, if you do not monitor your cibil report on a regular basis, some fraud might use your information for taking a loan or a credit card without you even knowing. You need to check the reports on a regular basis so that you avoid such mishaps. Majority of the time this kind of a situation is faced when a person is dead; the dead person’s details are taken for loan purpose. If you have anyone who has recently passed away, do inform your relatives about this and report the cibil authorities to avoid data theft.
To identify credit bureau errors
You always make your payments on time, no one can find errors in your financial pattern, but when you apply for a loan your loan gets rejected. This can happen because of credit bureau errors. The banks send monthly reports to the credit bureaus to update your score and to add financial history many a times there are errors, if you check the score on a regular basis you can avoid such mishaps and report it back to the bureau. Yes this process takes time, but it is always “better safe than sorry”.
You can get a free cibil report once in a year, where you can get all the information. Do not get the cibil report every month cause that will lead you to chances of declining your score, as when applying for a loan the banks will see how many times you have requested for the report. It is suggested get the report done every three months and try keeping a track on your finances to avoid any problems in the future.