Credit Score – you’ve heard the term before, haven’t you? You also have a vague idea that it’s a number banks inspect to determine your credibility. But do you know who calculates your Credit Score and what factors determine it? Well, this article will answer all your questions about Credit Score and all its ramifications.
What is Credit Score?
A Credit Score is a three-digit number indicative of your credit behaviour. Consider it marks given to you by financial institutions for your financial behaviour. A high score means you have good money-management skills and that you repay your debts on time. Likewise, a low score raises questions about your financial credibility.
How does this impact you? Well, banks always check your Credit Score before processing your loan or any other kind of credit request. A good Credit Score will help you get a loan or a Credit Cards easily. Moreover, you can bargain for better rates of interest on loans if you have a good Credit Score.
In a nutshell, your Credit Score tells financial institutions whether they can extend credit to you or not. A good Credit Score means you are a safe bet, and a bad score translates to ‘uh-oh, maybe next time’!
How to get your free Credit Score by BankBazaar
- Visit our website
- Select the menu option at the top right corner of the page
- Under the listed options, click on ‘Credit Score’
- You can also visit: /credit-score.html to access the page directly
- Select your gender
- Enter your date of birth
- Select the city of your residence
- Enter your address details
- Provide your name with PAN card details
- Enter your mobile number and e-mail address
- Sign-in to view your credit score
- Sign-up is allowed email ID, Facebook, and Google+ ID
- Once you have signed-in, you will be able to view the summary of your credit score
Who computes Credit Score?
Your Credit Score is computed by Credit Information Companies. There are four companies in Indian which do the job– CIBIL TransUnion, Experian, Equifax and High Mark.Let’s unveil the mystery around how these companies compute your score.
When you make a transaction—the one that is relevant to determine your score—banks send details about it to all four credit bureaus. To send details to all credit agencies is a mandate by the RBI. Essentially, banks keep Credit Information Companies up-to-date about your monetary habits. If a bank needs to check your Credit Score, they can approach any one of the bureaus. It doesn’t matter which one because all will have the same score for you– all four are equally authoritative and on par with each other.
After receiving information from the bank, credit bureaus get down to the task of collecting more information about your financial habits from other banks and financial institutions. The credit bureaus then processes this information to formulate what is called a Credit Report.
Now, what is a Credit Report? A Credit Report is your financial marks card. It contains your Credit Score. It’s wiser to check your score from time to time.
Why should I check my Credit Score?
It is very important that you keep a close eye on your Credit Score. It is the best way to gauge your chances to get a line of credit. Another reason why you should track your score is to know if it dips, or if an error has been made by credit agencies while calculating your score. This will help you make timely amends.
Do the four Credit Agencies compute scores differently?
Though the processes followed to compute your score might differ from agency to agency, your Credit Score calculated by all will be the same. This is because banks intimate the relevant information to all four agencies. Therefore, no matter which agency a bank picks to check your Credit Score, there will be no major discrepancy in it.
Of the four agencies, CIBIL, however, is the most popular since it was one of the first Credit Information Companies to start operations in India. This has fuelled the notion that CIBIL Score is more accurate than a score from other agencies. This, however, is not true. Banks give equal weightage to scores from all four agencies. Equifax, Experian and High Mark Credit Scores are as good to banks and other financial institutions as CIBIL Score.
BankBazaar has tied up with Experian, which means that we can help you check your Credit Score for free. Otherwise, it costs a few hundred rupees.
Isn’t CIBIL the deciding factor in a loan?
Though many believe this, it’s not true.
All Credit Information Companies, including CIBIL, create your Credit Reports which tell banks about you credibility. Second, CIBIL and the other credit agencies do not entertain requests from individuals to make changes to financial details in Credit Reports. Changes are incorporated when banks provide relevant information to these agencies. This ensures that information in your Credit Report is legitimate. After all, your Credit Score is one of the most important factors considered by banks when deciding about your loan or Credit Card application. Your Credit Score also determines the interest rate banks chalk up for you.
So make sure that you score big on this one!
Why is BankBazaar giving me my Credit Score for Free?
BankBazaar feels that you should always be in complete command of your personal finances. In order to help you with this goal, we have made provisions for you to check your Credit Score for free. Knowing your Credit Score before applying for a loan can help greatly.
If you have a good score, you can be rest assured that your loan or Credit Card application will be processed without any hassle. You can even leverage a good score to ask your lender bank for better rates of interest and additional benefits. On the other hand, seeking credit with a poor score will further lower your score. Let’s not even imagine getting approval for a credit line. Hence, check your Credit Score before you apply for a financial product. Work up the score if it’s not in the acceptable range.
TIP: Credit agencies review and renew your score every few months. If you have a poor Credit Score, start managing your money wisely and pay your dues on time for a good few months. Credit agencies will reward you by boosting your score.
Does my Credit Score get impacted if I enquire about it?
It depends on the kind of enquiry being made. There are two types of enquiries – hard and soft enquiry. Hard enquiries send your Credit Score down by a few points, while soft enquiries do not impact your Credit Score.
An enquiry made by an individual is called a soft enquiry. BankBazaar will make a soft enquiry on your behalf when getting your Credit Score from Experian. Hence, this will not impact your Credit Score in any manner. Moreover, checking your Credit Score on our website is free!
TIP: It’s wiser to check your Credit Score from time to time so that you stay in the know. Always check your Credit Score before applying for a loan/card. You will know whether your score will tide you over or if it needs fixing.
A hard enquiry is when a financial institution checks your Credit Score to take a decision on your credit application. Every time you apply for a loan or a Credit Card, the lending institution checks your score. Each time a bank checks your score, your score will dip by a few points.
TIP: If you are applying for a loan or a Credit Card, do not apply to many banks at the same time. Too many enquiries will hurt your Credit Score.
Why BankBazaar is asking me for my PAN and phone details for the Credit Score?
We need your PAN and phone details to extract your Credit Score from Experian. We assure you that your personal information is secure with us. We will not use your PAN or phone details for any purpose other than to extract your Credit Score. We will not share your details with anyone else. Pinky swear!
I have my score. What do I make of it?
Your Credit Score will be any number between 0 to 900 points. Use this guideline below as your reference to know what your score means.
- Below 300: You are too risky a bet for bankers and other lenders. You do not have a sufficiently big credit history to allow banks to judge your credibility.
- 300—449: When we talk about poor Credit Score, we are referring to this range. You cannot afford to miss a payment on your ongoing loans or card bills.
- 450—599: Mediocre, at best! Some banks will consider your loan and Credit Card request, not all. You can do better.
- 600—749: A score in this range is good, just shy of perfect. Banks will readily give you line of credit.
- 750—900: Banks will look at you favourably if your score falls in this range. It speaks volumes about your credibility. A Credit Score in this range will throw open a host of loan and Credit Card offerings for you at attractive rates.
What makes your Credit Score go down?
It is understood that having high balances on your credit cards can significantly reduce your credit score. Apart from that, there are several other factors that can hurt your credit score:
- Being late on your credit payments.
- Completely ignoring your loan dues/credit card bills.
- Creditors charge off accounts when credit card bills are not paid on time. The status of having your account charged off is one of the worst incidents that reflects on your credit score.
- Lenders use third-party debt collectors to retrieve the loan amount from you, in case they do not receive payments. Having your account sent to collections reflects very poorly on your credit score.
- Filing for bankruptcy can have a devastating effect on your credit score.
- When you request to close a credit card that has an outstanding balance, your credit limit drops to Rs.0. This is similar to a situation where you have maxed out your credit card.
- Closing old credit cards shortens your credit history. This has a negative impact on your credit score.
- Applying for multiple credit cards or loans within a short duration makes your credit score plunge. Hence, it is advisable to limit the number of applications.
- Having only one type of credit account will negatively impact your credit score. So, you should look to maintain a mix of loans and credit card debts and make consistent payments on time.
- If you fail to check your credit report occasionally and fix errors, if any, your credit score can be hurt. It should be understood that credit reporting bureaus also make mistakes while creating credit reports. If you do not monitor and correct your report, it may cost you a lot in the future.
Change in Credit Score - how often does it happen?
When you work on improving your credit, you should be very patient, so as to not get discouraged. Credit scores are calculated from your credit report. When you request for the score from multiple credit reporting bureaus, you may see a slight variance in the figures. This is fine, as long as the difference is not massive.
In order to understand how your credit score changes over time, you should know how often there will be updates to your credit report. Lenders/creditors usually report your credit information (both positive and negative) to credit bureaus once a month. So, technically your credit scores can change a little each month, based on the information that is updated.
How do big fluctuations happen?
Most of the changes in your credit score happen incrementally. Although you would not see changes instantly, over a period of time this can add up to a considerable amount.
However, there are certain factors that could instantly have a huge negative impact on your score. This includes a delinquency, i.e., a significantly late payment such as a 30-day delay on a credit.
Another big influence is the credit utilisation ratio. This refers to the amount you owe as debt as opposed to your credit limit. So, an increase in credit card debt will cause your credit utilisation ratio to rise, which in turn drops your credit score.
Consider another scenario in which you pay off all your credit card debts in one go. Your credit utilisation ratio will fall in this case. This would lead to a temporary hike in your credit score.
How does the Credit Score affect you?
A bank or lender would check your credit score or report to review your credit management skills, based on the review, a lender may or may not give you a credit. It is advisable to keep an eye on the credit score before applying for a credit card or loan. If you have a poor credit score and you keep applying for credit, every reject will further lower your score.
A good credit score will empower you with the ability to negotiate the interest rates. The banks or lender would like to offer a credit line to someone with a better credit score.
Calculation of Credit Score
As per Reserve Bank of India (RBI), every financial institution is expected to send financial data of an individual on a monthly basis to credit bureaus. Currently, there are four credit bureaus in India including CIBIL, Experian, Equifax, High Mark. The credit bureaus collect financial data that is useful for the credit score/report. All the four credit bureaus use a similar method for calculating the credit score, no matter from which bureau you’re receiving the score, it will have the importance as the other.
Based on the information from your credit history, such as details of a loan, credit card, and the payment habits, the credit bureaus will calculate a credit score that will indicate your financial credibility.
The following factors will be considered in the calculation of your credit score:
- Credit card utilization
- Payment history
- Age of credit lines
- Total number of accounts
- Entries for credit inquiries, and
- Negative status account
Monitoring your Credit Score
The credit score is updated on a monthly basis based on the relevant information provided by financial institutions. It is advisable to keep an eye on the credit score to determine your financial credibility while applying for a loan or a credit card. It will help you in avoiding the situation where your credit application are getting rejected due to a poor score. By monitoring the score on a regular basis will help in identifying mistakes and correcting errors before they are too late.
Soft vs. Hard credit inquiry
When you are obtaining your credit score or report, it is considered to be a soft inquiry and it doesn't have any adverse impact on your score. When the bank or lender inquiries for a credit report, it is referred to as hard inquiry and it can reduce your score. You can be rest assured that your credit score won't get impacted due to soft inquiries.
A credit score inquiry through BankBazaar would require furnishing PAN card details along with phone number. This information is required for verification purpose only to identify you as the owner of the report. The credit score is completely free in addition to the process being simple and fast.
If you have a good Credit Score, you can avail loans and Credit Cards faster and with ease. Check yours now!
Get The Best Credit Card - A good Credit Score may get you the best of Credit Cards. Get a feature-loaded card and reap the benefits.
Quick Loan Approval - A good Credit Score works like an expressway for your loan application. Banks may approve your application quickly and readily.
Better Interest Rate - With the backing of a good Credit Score, you can bargain for a lower rate of interest on loans and Credit Cards.
Loans Made More Affordable - Loans come saddled with processing fees and many other charges. You can bargain your way out of some of these charges with a good Credit Score.
Check your Credit Score right away and see if you are eligible for all these benefits. You can check your score on BankBazaar at zero cost.
Credit Score is one of the most misunderstood topics in the financial book. Here are four secrets to help you understand your Credit Score better.
Credit Score ? Credit Report
Your Credit Score is calculated based on information present in your credit report. Your credit report presents details about your credit accounts, credit application and debt repayment, among others.
Checking Your Score Will Not Hurt It
When you or a company enquires about your Credit Score, it’s called a soft enquiry and it does not hurt your credit score.
Credit Score Math
There are five prime factors that go towards deciding your Credit Score. They are - debt repayment, credit utilisation ratio, average credit age, type of credit account (secured / unsecured) and Credit Score enquiries made.
Keep An Eye On Fraud
You did nothing wrong and yet your Credit Score is low? Please go through your Credit Report thoroughly and immediately report any unauthorized activities to your bank to correct your score.
It’s important that you check your Credit Score regularly. BankBazaar has partnered with Experian and we will fetch your Credit Score at no cost. It’s just a matter of a few minutes.
Given the interest rates edging up this year, maintaining a healthy credit score is vital. Credit score directly influences whether you will be eligible for a loan and how much interest you will be paying back. Higher the credit score, lower is the interest rate and the vice versa. Any lender before approving a loan application or credit card application analyses multiple factors and one of the major aspects is checking the credit score that can drastically drop the chances of the loan getting rejected.
If the lender assumes you as risk borrower even though they will approve your application, but the chances are high that the interest rates will be tremendously high. So, before you plan to get an application approved keep a track of your credit score on regular basis either by taking free CIBIL score or subscription based CIBIL score. Scores normally range from 300-850. While above 750 is considered as a good credit score and can get your application approved in lower interest rate, scores below 750 shows your defaults that can increase your interest amount. If your score is below 550 chances are high that you loan application may get rejected. So, track your credit score for free from the various credit bureaus.
What are Credit Reports?
Credit reports are a summary of an individual's credit history. The report contains details of the credit and loan history along with other basic details. Most lenders (banks) use the credit reports in making effective lending decisions. In a credit report, you will find information related to all types of loans and credit account, the report will also contain details such as the name, date of birth, PAN card number, address, etc. You can also find details related to the last credit report check performed by a lender. In India, there are four major credit information companies (CIC)) that provides credit reports of individuals. Some of the CIC offer a free credit score check while the other don't, however, lender pay a fee while obtaining a credit report of an individual. When an individual applies for a loan or a credit card, the bank will review their credit report before approving the loan/credit.
The CICs collect the individual's information from financial institutions such as banks as well as government agencies such as the Income Tax Department. These reports help the lenders in minimizing repayment defaults by avoiding individuals with a bad credit history. Though the banks are not solely relying on these credit reports to give out loans/credit, these reports play a crucial role in the calculation of eligibility.
The following CICs gather individuals financial information to prepare credit reports in India:
TransUnion CIBIL Limited: (earlier known as - Credit Information Bureau (India) Limited) is the first Credit Information Company (CIC) of India that was founded in August 2000. The company collects and maintains records of an individual’s repayment habits related to loans and credit cards. These records are sent to TransUnion CIBIL Limited by the member banks and financial institutions on a monthly basis. The information received from these establishments are used to create Credit Information Reports (CIR) and credit scores. These reports and credit scores are provided to lending institutions such as banks in order to help them make lending decisions.
Experian Credit Information Company of India Private Limited: With headquarters in Dublin, Republic of Ireland, Experian uses its own methods of calculation to create credit reports. The credit report from Experian has information of an individual's credit and loan history that are bought as credit reports by various banks in India. Similar to TransUnion CIBIL Limited, Experian collect information from the member banks and other establishments. The lenders are required to pay a fee to obtain credit reports from Experian.
Equifax Credit Information Services Private Limited (ECIS): One of the oldest credit information companies of USA, Equifax is also the largest credit reporting agency in the US. Headquartered in Atlanta, Equifax provides credit reports for individuals as well as businesses. Equifax has tied up with various banks and institutions in India that help the company in creating credit reports and assessing credit scores.
CRIF High Mark: Considered to be one of the few credit information company that specializes in analytics, scoring, and credit management solutions. CRIF High Mark creates credit reports based on the information collected from banks, Income Tax Department, and other banking as well as non-banking companies. The credit reports from CRIF High Mark are available against a fee. There are many Indian banks who have tied up with CRIF High Mark to create reports and to assess their borrower's financial credibility.
What are credit reports used for?
The CICs will evaluate an individual's credit history to calculate a score that represents the individual's credit worthiness. Each CIC has their own method of assigning the score, however, a high score will indicate a healthy credit score while a low score can decrease the chances of loan application approvals. Most of the CICs will provide you with a free credit score while a fee is charged towards the credit reports.
Why Credit Reports are used?
The credit reports are used by lenders such as banks to determine the repayment capability of a loan/credit seeker. The credit report provides a useful insight into understating an applicant's past credit repayment behavior. A credit report will also contain information related to late or missed payments that can adversely affect your credit score. When an applicant applies for a loan/credit, the lending institution will look into the credit report to determine whether you will be able to repay the loan amount. There can be various reasons for obtaining a credit report, such as:
- Determining creditworthiness
- Reviewing missed/late payments
- Checking the credit score
- To analyze all credit and loan accounts under one platform
- Reporting errors on the report
- Making effective landing decisions, etc.
You can refer to any CIC's website to check whether you can purchase a quick credit report of yourself. These reports will help you in keeping a close tab on your credit score that can be useful while applying for any type of loan/credit. Reviewing the credit report periodically will also enable you to report any incorrect entries/information. If you are planning to apply for a loan/credit card, it is essential to make sure that you have a healthy credit score and report so the chances of loan application approval are higher.
The application process for obtaining your Credit Report
Most CICs offer credit reports through online and offline mediums. The individual will require producing of required details and make a payment to get his/her credit report.
The following documents and details are required for obtaining a credit report online:
- Date of birth
- PAN card number
- Identity authentication
The following documents and details are required for obtaining a credit report offline:
- Visit the CIC's site to download and fill out the form requesting for your credit report
- Self-attested and scanned copy of any of the Proof of Identity (PoI) such as PAN Card, Driving License, etc.
- Enclose a Demand Draft (DD) that is payable to the relevant CIC for the required fee
- Mail the documents along with the DD to the address mentioned on the CIC's website
The online process will be quicker compared to the offline method, however, you can track the status of your credit report for free. The CIC will typically email the password-protected credit report to the individual when the credit report is requested through the online facility. In the case of offline application, the credit report will be sent through postal/courier services.
What is the difference between a Credit Score, Credit Rating, and a Credit Report?
Most often, the term credit score, credit rating, and credit reports are confused with the meaning of the other term. However, the following list should help you in understanding each of the terms:
- A credit score is a three-digit numerical representation of your financial credibility that can vary from a score of 300 to 900 while the credit rating is referred to the scores that are assigned to businesses and companies. The credit reports contain a detailed overview of your credit history based on your past credit and loan details.
- A credit score or credit rating can change on a monthly basis based on the information provided by banks and non-banking financial companies (NFCs), if there are any changes, however, the information stored on your credit report stays for many years.
- Credit score is numerical while the credit ratings are indicated in ratings such as A, A+, etc.
- Few of the CICs offer free credit scores and ratings, however, credit reports are chargeable.
Credit Report and Credit Score - how do these differ?
When you apply for credit, the lender will assess two metrics that helps them take a decision on your creditworthiness. These are your credit score and credit report. For a better understanding of these factors, we have differentiated them in the table below:
|Your credit report has information on the current and past credit agreements that you hold. These include mortgages, credit card accounts, student loans, and inquiries on your credit history.
||A credit score is similar to a grade that is provided to your credit report. It is a 3-digit number that usually ranges from 300 to 900.
|The credit report is a reflection of your credit management, and you have control over the listings there.
||The credit reporting bureau assigns you the credit score based on your credit history.
|The credit report gives an outline on how much you owe your creditors over an extended period of time, whether you have been making payments consistently, and for how long each account was open. The report also lists associated public records against you, such as court judgements, bankruptcy filings, etc.
||A high credit score indicates that you are a low risk borrower, making you more likely to qualify for a loan.
|In order to access your credit report, you can get in touch with credit reporting agencies or use a credit monitoring service that offers you this information.
||Your credit score is a part of the exhaustive credit report that you receive from the credit bureau.
Importance of Credit Reports for companies and businesses
Similar to individual credit reports, the CICs prepare credit reports and assign credit ratings to businesses and all other types of firms. The credit report for businesses is closely reviewed by suppliers and government agencies while providing utility and business contracts. In fact, business and companies are required to provide their credit rating while applying for electricity, gas connection, phone, internet, and various other types of services. The credit reports also help businesses in managing market risk by carefully choosing their suppliers and business partners. The credit report enables the reviewing company to make business decisions with confidence.
The credit reports for businesses provide information related to the establishment, owners/directors, employees, profit and loss, liability, assets, pending court cases (if any), and various other details. These type of credit reports can be expensive based on the amount and type of information it offers.
Understanding the Credit Reports through key terms
If you are going through the credit report for the first time, the information and technical terms can turn out to be a little overwhelming. There are various acronyms that can sound similar to other terms, however, the following list will help you in knowing few of the key terms:
NA or NH: If you never owned a credit card or took a loan, there are chances that you will see an NA or NH on your credit score. NA or NH indicates that are there no, little, or insufficient credit activity to create a report or to generate a credit score.
STD: Applicable to an individual's credit report where the payments are made with the due dates.
SMA: Applicable on a credit report when the borrower has delayed the repayments.
DBT: This indicates a doubtful situation where the credit information has been inactive for over 12 months.
LSS: A credit report can be remarked as LSS if a lender reported the loan/credit card account as loss or if the account remains as a defaulter for a longer period of time.
DPD: Days past due (DPD) indicates the number of days that the account has not received a payment. Written Off/Settled Status: In a situation where the borrower could not make the repayment but came to an agreement with the lender for either a repayment plan or a settlement will indicate a written off or settle status.
Reading a Credit Report
A credit report is a detailed account of a person’s credit history. The credit report will include details of your credit accounts, like, credit cards, auto loans, home loans and any other form of credit availed from a registered lender. The credit report will also include details like payment history, credit limit and account balance, opening date of credit, status of loans (close or open, paid in full, not paid in full). The report will also include new credit inquiries, collection records and public records, for cases in which an individual has filed for bankruptcy or a tax lien. A credit report can seem like quite an intimidating document to read, but listed below is a section-wise breakdown of how a person should read his/her credit report:
Personal Information : This section of the credit report will contain information pertaining to the individual’s identity, such as, the person’s name, address, current and previous accounts, date of birth, etc. An individual should check the details provided under this section, if there is an incorrect address in the report or the person’s name has been misspelled, he/she should report this to the Credit Rating Agency (CRA) as this could be a sign of wrong data being reflected in the report or credit fraud.
Account Information: This section of the credit report will carry information pertaining to the person’s present and past credit account. The individual should check the details of this section carefully as this is quite a detailed section. The following details should be checked:
- Date of opening
- Name of creditor
- Current balance
- Highest balance/credit limit
- Monthly payment history
- Account type (Instalment, revolving, open)
- Account ownership (Individual or joint)
- Payment status
The individual should check the details in this section to verify that they are accurate. The balance reflected in various accounts are on the statement date, this can be a little confusing, as it may reflect a balance even if the individual has paid off in full or may show account that were closed prior to receiving the Credit Report.
Public Records: This section of the Credit Report will list and bankruptcies filed by the individual, tax liens availed by the individual or collection accounts. The dates provided in this section should be checked as they will directly affect how long they will appear on an individual’s credit report and affect the person’s credit score.
Inquiries: This section carries data pertaining to any inquiries made by companies regarding an individual’s credit score. If an individual applies for multiple lines of credit, this could affect his/her score negatively. In most cases inquiries do not affect a person’s credit score, as they are soft inquiries by lenders for promotional purposes. A soft inquiry is generated when the request for the credit report is not related to the individual’s request for credit.
A great Credit Score is anything above 800. If a bad Credit Score is the bane of your life, you can use the following tips to send it soaring. Want to know your score?
Keep your credit utilisation ratio at 30% for a good Credit Score. If you are struggling to stay within this limit, then get a card with a higher top limit.
A combination of secured and unsecured debt will send your Credit Score upwards. A Credit Card is an unsecured debt whereas a Car Loan is a secured debt.
Advantage of Old Credit Card Accounts
Think twice before you close an old Credit Card account as long running accounts add more value to your Credit Score. And if you are not using your card, keep it safe to prevent misuse or fraud.
When it comes to credit reports, scores, or any debt in general, traditional perception is often seasoned with myths and misinterpretations. So you should not let that information influence your financial conduct. You should understand that credit is a financial tool/facility like any other. Its neither good nor bad on its own. The way in which you use it is what gives it a good or a bad flavour.
Listed below are some of the most common myths about credit that you should know:
You will not receive credit if you do not already have it
When you approach a lender for a loan, four elements of your credit report are analysed:
- Account history
- Public records, such as court records or bankruptcy filings
If there is no established credit history for you, you just have to get someone to co-sign or authorise your loan. In case you do not have someone who can co-sign for you, you can explore the option of getting a secured credit card. This type of card requires you to put up cash as collateral. Once you start using the credit card, you will be able to establish a credit history. It is important that you make payments on time and use credit conservatively. Be patient, as it will certainly take time to build a credit history. Once your credit history is periodically evaluated, if you have a good standing, your credit score will increase.
Checking your credit report will negatively impact your score
If an individual accesses his/her own credit report, it will not have a negative impact on the score. In fact, it is a healthy practice to check your credit report at least on an annual basis. Reviewing a report results in a “soft inquiry” that will only be reflected in a personal credit report. When a lender reviews the credit report, a “hard enquiry” will be added. These hard enquiries are shown to other lenders who review the report in the future, as these may represent new debts that are not yet visible on the credit report. Too many hard enquiries can have a negative effect on your credit score.
Once your credit score is bad, it is not possible to rebuild it
A bad credit report can be rebuilt over time. The report shows all credit issued under the consumer’s name. It also shows all items that are closed or inactive. If you have missed payments or have made late payments, it can remain on your credit report for up to 7 years. In this time, you can rebuild your credit report by paying your dues on time, looking for better credit choices, and being judicious while spending. You have to remember that an old negative information in the report is less important than a recent positive one.
The government owns credit reporting agencies
Credit bureaus are not owned by the government. However, the government has laid down many laws on how these should operate.
Paying in cash always helps to improve credit rating
Using cash for all payments is certainly not better than using credit responsibly. This is because a consumer has to develop a credit history (displaying responsible credit usage) in order to establish a good credit score. If a consumer does not hold various types of credit accounts, his/her credit score will not be as good as another individual with a history of responsible credit usage.
Why is PAN card required for checking the credit score?
The PAN card is required for obtaining the individual’s score accurately. The credit score can also be obtained by using other valid Proof of Identity (PoI) instead of the PAN card. The PoI helps in identifying individuals in the database.
Can credit score inquiries affect the score?
No, the inquiry will not affect your credit score. When you apply for a loan or a credit card, it can have a slight impact on your credit score but when you are checking your credit score it is not.
Why do we need a phone number for credit score?
The phone number helps in identifying individuals accurately. Your credit report will already have your phone number, when you provide your phone number, it is verified against your records to ensure you are the right recipient for your credit score.
Is there a limit to request for accessing credit score?
There are no limits to the inquiry of credit score. You can check for your credit score as many times as you need to. The inquiry for the credit score is considered as a soft check while only hard checks can impact your credit score.
How the credit scores changes?
The credit score depends on the credit report changes, as and when the changes are made to the credit report, the credit score would change depending on the positive or negative impacts. For example, when you are applying for a credit card or loan, making payments towards the credit, it will impact your credit report and the score.
What is the significance of credit score range?
The credit score range can vary depending on the assessor, however, the value will represent the same level of creditworthiness. The credit score summary will also indicate the health status, it will tell you if a particular score is excellent, good, average, or poor.
What can be considered as a good credit score?
Credit score may vary based on the credit rating company. The credit report and score will provide you with an indication of whether you have a good or bad score. A good score with a particular assessor will more likely to have a good score with another assessor.
What are the factors that are included in the calculation of credit score?
There are few factors that are considered while calculating an individual’s credit score. Primarily, the account information that includes information of credit cards and loans, the public records containing information pertaining to tax lien and bankruptcy, and the hard inquiries made by your lenders will be accountable for the calculation of credit score.
Will the credit score be affected for owning multiple credit cards?
This will depend on your credit history. If you have multiple credit cards with a higher limit and you are under-utilizing or over-utilizing it, this can impact your credit score negatively.
What type of information is included in my credit report?
The following information will be included in your credit card report:
What kind of information is not included in the credit report?
- Individual’s name, address, and other personal details
- PAN card and contact number
- Credit history
- Credit cards/loans
- Payment patterns
- Lender’s inquiry details, and more
A credit report won’t contain any information related to your checking or savings accounts. Also, the information pertaining to criminal records, medical history, lifestyle, and other details are not included in the credit report.
How long does the information remain on a credit report?
This will depend on various factors such as the inclusion of hard inquires, payment details, credit card, and loan applications. As soon any changes are detected, your credit report would change. The information is obtained on a monthly basis for the changes to be implemented. If you find any error on your credit report, you are recommended to get it corrected from the assessor.
Is it possible to delete information from the credit report?
Unless it is incorrect, no details can be deleted from your credit report. The credit report provides an insight of your credit history and lending worthiness. Most lenders vastly depend on the credit reports to assess the lending risks.
What do I need to do to if I find errors on my credit report?
If you notice any error or wrong entries in your credit report, you can get in touch with the credit report provided to get it rectified. The process is simple, you can get in touch with your credit report provider through phone, email, and other mediums.
Is the Credit Information Report same as the CIBIL Score?
No, the Credit Information Report contains details of credit history and inquires, CIBIL, like various other credit rating companies have their own method of calculating the score based on the information on the credit report. The Credit Information Report has all the details of an individual’s credit date while the CIBIL score indicates the credit worthiness. The CIBIL score is derived from the information available in the Credit Information Report.
Who can access my credit report?
Your credit report can be accessed by you, lenders, and government recognized regulating bodies.
Why do lenders check the Credit Score?
The lenders refer to the credit score to determine the credit worthiness of individuals. It helps the lenders or the banks to understand the risk factors involved in lending out money to an individual.
Can the CIC (Credit Information Companies) change or delete my credit information?
No, the CIC collects information from various financial institutions but doesn’t change any data. The CIC compiles information related to credit transactions and payment histories of an individual.
What’s the credit score required for application of a credit card?
A score of 700 and upwards has a higher chance of approval for credit card application. The banks might hesitate to give you a credit card if the score falls under 700.
How can I improve my Credit Score?
What is the highest score you can get on Experian?
- In order to improve your score, you will need to know your credit score and get a detailed insight by obtaining a credit report. You can also incorporate the following tips for improving your credit score:
- Don’t keep applying for a credit if it’s getting rejected. If you keep applying for a credit, it will further impact your credit scores negatively. Every application demands a hard check on your credit report.
- Pay your credit card bills and loans within the due dates. Failing to pay the bills and EMI on time will be recorded in your credit report.
- Avoid the settlement of loan and credit cards.
- Keep your borrowing limit to the lowest possible.
- Review your credit report at least once a year to keep a tab on your credit score and patterns.
Experian’s credit score ranges from 300 – 900. 900 being the highest score.
Why am I rated differently?
There are instances where you can find yourself rated differently. India has four credit rating agencies formed and authorised by the Reserve Bank of India (RBI). They are CIBIL, Experian, High Mark, and Equifax. The parameters and the credit rating module used by each of these agencies will differ. The amount of importance placed on each of the considerations will also vary. For instance, payment history, which is one of the normally considered parameters, shall be weighed differently. As a result, you are rated differently.
In the formal banking system, the agencies garner the credit details of every customer from Non-Banking Financial Institutions (NBFIs) and banks. The information is massive. It includes details such as account history, payment history, deferred payments, missed payments, loan applications, loan approvals and disapprovals, credit accounts etc. You may transact with many bankers, licensed brokers, and NBFIs. All lenders may not report to the same agency. When you are picked up by different agencies, there can be a minute difference in your rating. All credit crores are equally valid.
How frequently should I check my Credit Score and credit reports?
- Experian Credit Score
Experian was licensed in 2010. An individual is rated in the range of 0 and 999. 961-999 is considered excellent, 881-960 good, 721-880 fair, 561-720 poor, and 0-560 very poor.
- CIBIL Credit Score
CIBIL was licensed in 2009. CIBIL uses advanced analytics. An individual is rated in the range of 300 and 900. Anything above 750 is considered good. The parameters include credit exposure, credit utilization, credit history, and credit type and duration.
EQUIFAX was licensed in 2010. An individual is rated in the range of 300 and 900. The parameters used include account categories, the number accounts, consumed and available credit, credit history, and the length of the payment history. Anything more than 750 is considered excellent, 700-749 good, 650-699 fair, 550-649 poor, and anything below 550 bad.
- HIGH MARK
High Mark was licensed in 2010. The lowest credit score is 300 and the highest 850. An individual with a good score is considered more potential than an individual with a poor score.
How your credit score is interpreted is more important than just a number.
Checking credit reports once a year seems ideal unless you have some strong reasons to review them frequently. A free copy can be obtained via any of the rating agencies that compute the credit score of a customer using these reports. No information is shared among the agencies. In lieu of reviewing a single report, be advised to review all the reports at the same time if it was not done earlier. Check the details thoroughly and make sure they are error-free. Dispute the errors or the wrong information if any.
Credit scores can be reviewed based on your comfort zone. Checking yearly may seem adequate for some, but a majority of people prefer reviewing monthly or even weekly. Despite how frequently you check, your score should not be impacted. Be focused on the overall trends in lieu of daily trends. Credit scores can be frequently checked in the following circumstances:
What needs to be done if my Credit Score climbs up?
- Applying for a new credit card
- Applying for a mortgage
- Looking for a job change
- Safeguarding against identity theft
- Establishing credibility
A credit score tends to change from time to time. A lower score may turn higher or a higher score may turn lower depending upon your credit reports. A person can also maintain a consistent score. Being well-rated is always better for many reasons. You can have multiple checks. If you notice a reasonable hike in your score compared to the previous review, you can:
Can I have more than one Credit Report?
- Negotiate a competitive credit card interest rate
- Negotiate an attractive interest rate on loans if any
- Negotiate a higher credit limit
- Ask for better insurance rates
- Bring it to the notice of your banker for loan approval if any
Yes, credit reports contain your overall banking history and are used to assess your credibility, which is your credit score. A free copy of your credit report can be obtained once a year from each of the credit rating agencies that include CIBIL, Mark High, Experian, and Equifax. You can also request for obtaining all the credit reports at once.
How can I build credit with no credit history?
A sound credit history is useful to apply for a loan. It shows how effectively you have managed to repay the earlier obligations. If you have never used a credit card or never borrowed a mortgage, your credit history stands nil. Lenders may not issue a credit card or prolong a loan. Consider the following ways to build credit with no credit:
Can I use my credit report to safeguard my identity?
- Obtain a secured credit card
- Make payments in time
- Use your credit card wisely
- Restrict yourself applying for various bank loans
- Track the progress of your credit score and credit reports periodically
Yes, you can. Over 8 million adults are affected by identity theft every year. Review your credit reports once a month. Be safeguarded by obtaining an updated credit report to review for any doubtful fresh accounts. Observe the below cited general identity theft signals on your reports.
- Unanticipated usage of old credit accounts
- Wrong personal details
- Unknown credit accounts and credit cards