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Top 12 Questions Linked with Credit Score, Answered

If you are one of those looking for your financial report, then you must check credit score by fetching your credit report from any of the credit bureaus, as it will allow you to know about your behaviour with money and your credit history.

Founded in around 2000, CIBIL or credit information bureau of India limited accumulates records of individual’s loans as well as credit cards. CIBIL, being ISO 27001: 2005 certified, is distributed in 2 divisions, namely the commercial bureau and the consumer bureau. The consumer bureau was launched around 2004 and had more than 260 million records. At the same time, the commercial bureau was launched around 2006 and had more than twelve million records.

How is your credit score computed?

A credit score is computed by credit bureaus. In India, there are 4 main credit bureaus – Experian, Equifax, CIBIL and High-Rank CRIF. Such companies track your past repayment history and then compile it in the form of a credit report. Depending upon such info in the report, they can compute your score using their proprietary algorithm.

What is meant by credit score?

Banks, as part of the due diligence procedure, gauge your credibility by reviewing your credit score. The information listed on the credit report involves various variables that the CIBIL uses to set your score. Credit score thus shows the extent of your possibility of default. Your credit history is submitted to the CIBIL by financial institutions and banks on a monthly basis.

What do low and high credit scores determine?

A high credit score crucially means less possibility of default. A low credit score shows the high possibility of default.

What is meant by a strong credit score?

Your credit score ranges anywhere between 300 and 900, wherein 750 and above is looked upon as a good score. To maintain a strong score, ensure you keep up with your credit card bill repayments and other loan repayments on time. You must also keep your credit limits low by not spending over thirty per cent of your credit card limit. And if you hold an old credit card that you are not using anymore but is still active, ensure you use them on an occasional basis.

Can your score fall for no reason?

Yes, at times, with zero mistakes of yours, your score may take a massive hit if your report contains any error. Common errors might involve inconsistent details and loan details of others in the report. Reviewal of your credit report at least once a month can assist you in spotting such issues, which you can fix by reporting to the credit bureau.

Is your credit score and your CIBIL score the same?

No, CIBIL refers to a credit bureau generating your credit report and credit score. Owing to such popularity, many people tend to use the term ‘CIBIL score’ to address your score in general. However, they are different things. While your CIBIL score may be addressed as a credit score, your score cannot be addressed as a CIBIL score. This is because your credit score may be generated from Experian, CRIF Highmark, or Equifax.

Is credit score applications safe?

Like anything else, few credit score applications are safe while few aren’t. You must always ensure to select credit score applications that are well reviewed and popular by other crucial users. Always review the number of reviews, downloads, and kind of permissions.

What credit score is required for a loan?

If your score is more than 750, you can avail of loans simply and at an attractive rate of interest. If your credit score falls between 600 and 750, there are chances that you will still avail of a loan, but the rate of interest will be higher. Anything less than 600 will mostly lead to application rejection.

When should you fret about your credit score?

It is normal for your score to fluctuate, and you must not worry about it if it stays over 750. Anything below this score is when you must proactively take good measures to get back on track. Most essentially, you must continue to check your credit score periodically, understand the parameters impacting it and work to ameliorate and maintain a strong credit score.

You can use online digital marketplaces to get an accurate and free credit score​s. With a free credit score report, you can know areas you must work on like maintaining timely repayments, maintaining a balanced mix, keeping credit utilization low etc.

What is known as a poor credit score?

If your credit score falls between 300 and 650, it is looked upon as poor. In such cases, it is crucial to know which parameters are impacting your score and how you can ameliorate it. By checking your score through online financial markets, you can know where you stand and what steps you must incorporate to ameliorate it.

Can you check your credit score for free?

Yes, there are various platforms today that allow you to check your score for free. But few platforms also share your details with 3rd party platforms. If you are looking for any non-spamming platform, you may consider downloading the One Score app.

If there is an error or mistake in your credit report, what must you do?

It is a great idea to review your score periodically, not just to check your finances but even to ensure that there are zero mistakes or errors in your report. Common or popular mistakes might involve inconsistent contact info, loan details of others showing up in your credit report etc.

When you view a mistake or error on your report, all you must do is directly notify the respective credit bureau. The credit bureau will then evaluate your request to rectify any errors or mistakes. Online financial apps provide you with an instant way to review your reports and even route you to an apt bureau. Thus, before applying for any loan, say a personal loan, ensure to check your credit scorefor personal loan. Doing so would allow you to know if you are eligible for loan application approval.

 

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