Thursday, 15 March 2018

Are The Credit Scores Real


What’s real and what’s not? What’s true and what is not? I am correct or not? When there is anything which is very critical and sensitive, these are the question which is bound to emerge. While talking about credit health, these are the obvious question which arrives in anyone’s mind. That what kind of score is perfect. What is my real score? Does my report really say everything true about myself? Is it best to invest in a loan or a credit card to get a better score? For that matter, is my score real?

                Let’s discuss the part which asks if the credit score is real. Rest everything will be answered automatically. To know how exactly credit report is made and how is the score calculated. The credit report is made op various segment which has your personal information. This includes all KYC details like :
  • Your Name
  • Your Address
  • You mobile Number
  • Your Pan CARD Number
  • Your Aadhar Card Number
Along with this, it has all the detailed details of the credits you have
  • Loans which are taken till date (both will be shown, the one which are running currently and once which are closed.)
  • Credit cards with their details. (both, the one which is existing and the one which is expired or closed)
  • The payments which are pending.
  • Hard inquiries which you have made.
These are the things which a report has. Now let’s understand that how is credit score made. The credit score has basic 5 things, of which it is made-up of:
  1. The payment history – 35%
  2. The amount owed – 30%
  3. Length of the credit history – 15%
  4. Credit Mix – 10%
  5. New credit – 10%

                With this, a person can understand the basic, of the credit report and credit score is made or what does it consist of. Now the fact, that whatever you do in terms of credit, is reflected in your report. If you make the timely payments, if you do not do timely payments, if the amount what you owe is genuine if you have many older credit accounts which are still in running or they have been closed, is the credit available with you is of secured and unsecured type of credit or not. Haves you applied for new credit, or you have applied for too many credits; all of this is reflected on the basis of the data banks, financial institutions and insurance companies give to the credit bureaus. This is because, a Pan Card is must when you get any of the credits, and with that information, every thing is reflected in report.

                Parallely it is very important for anyone to know that credit score is given by credit bureaus, but the information what bureaus get to generate the credit score is given by banks, financial institution and insurance companies. They update the bureaus about your payment history if you have made the payments on perfect time, if they are made late. If there are late payments then its late by how many days? Now all these informations are the facts which is your behavior in repaying the credits. So there is no scope that they are not real.

                There are 4 bureaus in India. CIBIL, Experian, Equifax and Crif Highmark. All these 4 bureaus have a slight difference in how they calculate the score. The basic 5 parameters are the same, the only difference is the % weight-age they give to each factor. However, the major 2 factors, viz Payment History and Amount Owed will always be the maximum holder of the score, but other factors are a little here and there. If you compare all the credit score, theere can be an average 50 points difference. If in case it more than that, please check your detailed credit report and make sure the all the entries tally in both the report.

                Be responsible enough to pay the credits on time, for the matter that thats the basic thing your credit behavior displays!

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