A credit score represents your credit history as a borrower. The score, which ranges from 300 to 900 in India, is assigned to individuals whose credit history is at least 6 months to a year old. A good credit score is 750 and beyond. But even if you have a score of 700-750, it will be considered reasonably good. But if the score is below 650, it will be deemed poor. Lenders check your credit score as soon as you apply for a loan or credit card. But before applying, you should do a soft credit check.
When you check your credit score on the official website of the credit bureau, a soft inquiry is made by you. This could decrease your score but minimally. The reason why you should do a soft check is that if the score is bad and you have submitted the application before or without checking the same, the lender can reject the application made for personal loans, credit cards, etc. But doing a soft credit check is required at other times too. Here are the situations when you should check your credit score.
Before Applying for a Loan/Credit Card
You should do a credit check before applying for a loan or credit card. Why is it important to check before applying? Because it helps you understand the chances of getting the credit. If your score is 750 or above, the lender may approve your loan or credit card application without any hassle. Whereas if it is low, you need to check the credit report and find the reason for it. Usually, the credit score is low due to the non-payment of the credit card bills and loan EMIs.
So, you must improve your credit score if it is low and apply after it is high.
Before & After Making the Balance Transfer
If you are transferring your existing loan to a new lender at a lower rate, then before that, check your credit score. Because your high credit score can help you negotiate to get the interest rate reduced further. And when the transfer is made, check your credit score again to know whether it has affected your score. Every time you apply for a loan, a hard inquiry is made on the credit report. And each hard inquiry has the potential to lower the credit score to some extent if the lender rejects your application.
When the Loan is Paid in Full
Paying off a loan might be a big relief for you. But do you know how it will impact your credit score? It all depends on your credit profile and the type of credits you service. A credit mix with more secured loans can aid your credit score more when you have more unsecured loans to the portfolio.
After Debt Settlement
When you do a debt settlement, a lender and the borrower agree to a lower amount compared to the balance loan. This relieves you from the loan liability but leaves a tag of ‘settled’ in your credit report. But if you receive surplus money that can help pay the entire outstanding in the future, you can get the tag removed. You can go to the branch of the lender and request to pay the overdue amount which is not settled. After which you can check your credit report and know your score.
How to Check Your Credit Score at Wishfin?
Now, credit scores are provided by many credit bureaus such as CIBIL in India. Of the credit bureaus that operate in India, CIBIL is widely recognized because it arguably has a greater collection of data related to loans and credit cards than any other credit bureau in India. You can check your CIBIL score for FREE at Wishfin, the official partner of Transunion CIBIL. Just follow the steps shown below and check your credit score at Wishfin.
- Mention your name, email, ID and mobile number
- Enter your PAN details
- Select Gender
- Agree to the Terms & Conditions
- Click on ‘Submit’
- After that, you’ll get a CIBIL score on the screen.
Advantages of High Credit Score
- Lower interest rates: You are eligible for a low rate of interest when your credit score is good because it makes the lender confident of your sound debt management skills.
- Attractive Credit Card Offers: If your score is high, lenders will offer you credit cards loaded with benefits such as massive cashback and rewards on online and offline purchases, attractive dining offers, and travel privileges.
- Instant approvals: Loans and credit cards are approved quicker when the credit score is high.
- Negotiating power: You can negotiate with the lender to increase your loan limit or decrease the interest rate if your credit score is high.
- Build a good credit history: It helps in making your credit record better so that you can borrow funds anytime whenever there is an emergency.