Like many of you get health checkups at least once a year, financial checkups to are crucial by reviewing credit reports regularly. Many financial experts often ask you to remain updated with your financial report by checking it through online financial platforms. But owing to your laid-back attitude, you usually either forget to do so or endow less importance to your credit report. Remember that checking your credit report regularly helps you become aware of various financial frauds or errors and even identity thefts.
Besides this, there are many who often ask how I can check my CIBIL score. Knowing the ways to check your credit score is important so that you can keep track of it regularly. You can check your CIBIL score either through online platforms every month or through the CIBIL Bureau website. Note that if you check your CIBIL score through the CIBIL's site, you can just avail of 1 free credit report for free. Applying for more than one credit report through CIBIL's website is chargeable.
Read on to know why it is necessary to check your report periodically without fail:
Credit reports hold high importance in getting your credit application approved
A credit report is a quick summary of your past repayment record used by the creditors or lenders to check your credibility as an applicant before approving your credit application. There is always a possibility that your name may be stated incorrectly, or your residential address may be wrong. In case there are any such issues, errors, discrepancies, your application for credit may be rejected. Thus, it is important for you to review your credit report periodically to detect such issues and, more importantly, report them once identified for rectification. Doing so boosts your eligibility for loans and credit cards.
Protecting yourself against any identity theft
Many individuals across the globe are victims of identity theft. This is an unlawful practise where your personal data is often stolen to avail credit in your name. According to the Norton Report of 2015, about 1042 million identities were breached across the globe. A close watch on your credit activities through your credit report can assist you in identifying any suspicious entries in your name, which you can deal with efficiently within time by contacting the bureau as well as the lender through whom such transactions were conducted. You can also identify and report unauthorized transactions in your name by reviewing such reports.
Understand the impact of missed repayments
You often hold credit card dues and loan EMI, which must be repaid in full by the due date. Many irresponsible or unaware credit users make the mistake of repaying just the minimum amount due in anticipation that no charges will be deducted. However, making the minimum amount due to repayments on your credit card does not levy any late payment fee, which usually is a nominal amount of up to 1,300 per month but charges a high finance charge on the unpaid amount of up to 52 % p.a. This charge of up to 52 percent p.a. is one of the highest charges levied by any credit option. Even personal loan levies a comparatively lower charge of just up to 24 percent p.a. Repetitive missing of full amount due repayment on your credit card, burdens you with an extremely high outstanding amount owing to the involvement of heavy penalty in the form of finance charges. Such build-up often slowly sweeps you into huge debts, which in turn disallows you to also serve your minimum amount due. Inability to serve your minimum amount due results not just in heavy debt accumulation but also in a negative impact on your score, which pulls down your eligibility for any credit option for the long term until you begin building your score again through disciplined credit behaviour. Assessing your report periodically shows your bit by bit fall in your credit score, which propels you to take corrective measures to bring up your score again.
To ameliorate your credit score.
A credit score is one of the pivotal components of your report. It is considered a numerical representation of your credibility. So, if you review your credit report and know that your score is below the preferred margin, you can steadily work towards ameliorating it. Note that a credit report is the same as a report card wherein the report card shows your academic behaviour, your credit report shows your financial behaviour. Thus, if you are one of those misusing any of your credit accounts, it will clearly reflect on your credit report and force you to take corrective steps for improving it.
Why is a credit score for home loan approval important?
The next crucial question asked by many is why a credit score for a home loan is necessary. As stated above, for lenders of any credit option may it be home loan, car loan, personal loan, or credit card, reviewing your credit score is important to know your creditworthiness, i.e., your behaviour with credit and understand your repayment capacity by reviewing your outstanding dues on other existing credit options. Through your credit report, lenders or creditors get to know if you have ever committed any defaults in the past, your CUR, your credit mix, i.e., a mix between secured or unsecured loans, the number of credit enquiries performed by you etc. With this data, they are in a better position to decide whether to approve your loan and what interest rate and processing fees they must charge for the processing of the loan. Having a higher credit score, as stated above, helps you crack a better credit deal at the lower interest rate and nil or minimal processing charges. Holding a higher credit score also makes you eligible for different preapproved credit options. Note that preapproved credit options are those which are approved instantly on application and are usually offered to you if you have a good credit score and excellent repayment capacity.
Comments
Post a Comment