If money could grow on trees, we could have easily paid up for the expenses our future is lined up with. Sadly, it does not. We have to depend on our monthly paycheque, savings fund, and investment portfolio to manage our expenses. But even these resources are limited. So, what about heavy expenses such as buying a car, a house, or paying for medical emergencies?
No matter how sizeable your savings fund is, sometimes you need to take a loan to safeguard your current financial resources and fulfil your goals.
However, you need to have a high CIBIL score to ensure that your loans are easily sanctioned. For that to happen, you must keep conducting credit score checks from time to time.
But first, what are Credit Score Checks?
Credit score checks determine your CIBIL Credit Score. CIBIL score is an indicator of your credit behavior. This includes your credit history, the amount of credit you have availed, how soon you have repaid it and more. Lenders do a credit score check before they approve your loans. A high credit score deems you credit-worthy in the eyes of the lenders and increases the possibility of loan approvals.
Credit score ranges between 300 – 900, depending on the credit bureau. Let us understand what each range of credit score means:
- 800 -900 – Excellent
- 750 – 799 – Very Good
- 650 – 749 -Good
- 550 – 649 – Fair
- 300 – 549 – Poor
Now that we comprehend the basics of credit score let’s understand why regularly carrying out a credit score check is imperative for you.
1. To Know Where You Stand Financially:
Credit scores give you a reality check of your financial standing. Your financial standing is indicated by the credit you avail and how soon you can pay it. Knowing your financial standing is important to understand if you can manage your expenses both in the present and the future. If not, having a better idea of this can help you enhance your financial well-being in the future.
2. Helps you Take Financial and Investment Decisions:
Thinking of availing another credit card? You can determine if it is the right decision by doing a credit score check. A credit score check can point you in the right decision when you have to make crucial financial and investment decisions. For instance, you might reconsider procrastinating paying your bills on time if you think it will damage your CIBIL score or affect your future ability to secure a car loan or home loan.
In addition, frequent credit score checks would help you make significant investment decisions. For instance, if you are considering availing credit to invest in SIP, a credit score check can help you determine if it’s the right decision. (If you are planning to invest in SIP, you can also use a SIP calculator online to calculate returns and support your financial planning.)
3. To Make Sure your Credit Information is Correct:
Even though a credit score paints a true picture of your credit behavior, it’s not so uncommon for users to report errors and inaccurate information in the credit report. Inaccuracies in credit reports can include incorrect contact details, incorrect credit balance, inaccurate credit limit, and much more. In such an instance, you need to contact the credit bureau agency to report these errors.
4. To Get Hassle-free Loan Approvals:
No lender will approve your loans if they do not find you creditworthy. Lenders prefer approving loans for those who they think will pay back the loan on time and with interest. This is why doing credit score checks becomes important. Credit score checks allow you to view your credit score and improve it to ensure that your loans get approved without a hassle.
5. Be Updated About the Changes in your Credit Score:
Credit scores are updated from time to time. This is why it is essential to do credit score checks to be updated about these changes. If any of these changes affect your loan approvals, or you feel they do not align correctly, you can take adequate actions to rectify the score.
How to Improve your Credit Score?
Our key takeaway is that frequent credit score checks are essential for your financial well-being. Doing so can help enhance your creditworthiness and increase your credit score. But how do you improve your credit score? Is it even possible? Turns out it is. Here are some tips that you can use to improve your credit score.
- Customize your credit limits
- Prefer using debit cards over credit cards.
- Refrain from taking heavy debt all at once.
- Pay your bills on time. Feel free to use payment reminder apps to make your work easier.
- Go for a healthy mix of credit; opt for both secured and unsecured loans.
If you are doing regular credit score checks and are following these tips, your credit score will certainly improve. However, you have to remember that these healthy habits will not bring a change in your credit score immediately. It can take anywhere between 6 months to 1 year for your credit score to improve.
Santosh Kumar is a Professional SEO and Blogger, With the help of this blog he is trying to share top 10 lists, facts, entertainment news from India and all around the world.