Do you know what a credit score is ?
Why do you need one ?
Who issues you a credit score ?
What if we apply for a loan coming financial year and the Institution rejects it on the basis of the credit score ?
What would be the result of your funding plan to book your residential property or a luxury car ?
Would you want the new financial year for you start with a disappointment ?
We have seen that a good financial plan must be supported with the current realities mapped , credit score is one of the current realities .
Lets go to the basics first
A credit score is a score provided by a credit bureau basis the financial affairs of that individual .
Financial Affairs involve to name a few :
- Bank Loans
- Car Loans
- Credit Cards
- Utility Bill Obligations
What is seen :
- Tenure of the transaction
- Repayment record
- Pending dues
What is considered by lenders :
- Late Payments : this is seen as lack of liquidity
- Missed Payments : this is seen as lack of liquidity
- Increased Spends on Credit Cards : this is seen as credit requirement for every transaction
- Usage of more Credit Cards and high usage on all the Credit Cards : this reflects a credit hungry behaviour
- Large amount of personal loans
- Applying for too many loans for credit shopping : this is seen as credit hungry if done simultaneously
Where the problem starts :
For example lets say you had a vodafone number taken , some billing issue cropped up and the number was discontinued and balance dues were pending , could be very minor amount as low as Rs 50 /- lets say , when credit bureau checks this entry is reported , and the score drops , imagine for such a low value transaction you could be denied a home loan , such cases have happened
What to do in such cases :
Settle the balance dues with the utility provider , take a written communication to that effect and request them to report to the credit bureau within one week , once this is received from the credit bureau the entry will be removed and the score improves .
What is the Score range :
A credit score is a three digit number that acts a summary for your credit history and credit rating. This ranges from 300 to 900 with 900 being the best credit score you can get.
Most loans approved are for individuals with a score of more than 750 (the range is 300-900).
Who provides the credit score
- Transunion CIBIL https://www.cibil.com
- Equifax http://www.equifax.co.in
- Experian http://www.experian.in/index.html
- CRIF Highmark : http://www.crifhighmark.com
Free Report Available – yes free reports are available post registration but the details of transactions are not disclosed
Paid Report – Around Rs 550 is charged for the report , this report is a detailed one which involves credit history for a longer range , when you see this report you generally get a sense of how maintaining financial transactions carefully will reflect good on your credit score .
Call to Action :
- Get your credit score today
- Empower your close friends & Colleagues by sharing this note
Start your first week of this financial year with awareness about what your credit score is . If you find it lower than 750 , check the reasons from the report and make sure you take concrete actions in case there is a transactions which is bringing your score down .
Wish you an empowered financial year ahead