If you have no idea about what your credit score is, it’s advised to find it out at no matter at which stage you are in your life. You can detect any errors in your report at the early stage, which gives you more time to rectify your mistake.
And if you are one of those who know their credit score, then how do you know if your credit score is good enough? The question is obvious but it has many answers. This is because the four credit bureaus in India assess consumers differently.
Good score equals good deals and lower interest, while bad score equals to the least attractive deals and higher interest.
What is meant by credit check?
In simple words it is how a particular lender assesses your eligibility for a loan or credit card. The lender needs to know credit management so that he is sure that he will get his money back in time.
The credit report contains all the information about you. The details of all the timely payments you made, the payments you missed, penalties, other charges, defaults (if any), and every credit you have ever taken. You can get one free credit report every year from CIBIL.
What makes your credit report important?
Your credit report is the deciding factor in the grant of a credit. Lenders’ decision dwells completely upon how good your credit report is.
All the lenders have their own different system of assessment which includes consideration of various factors from your credit report. Other factors they may consider are your income and salary receipts.
A common notion people carry is that there is a blacklist for defaulters and you have only a single credit score, these are not true. Credit bureaus maintain the record of both defaulters and non-defaulters alike and no blacklist exists. Your credit score may vary depending on the credit agency used. That’s why, if you were declined from one place then you may be accepted somewhere else.
If you have a lower credit score then you may be either declined or accepted with a higher rate of interest.
The Application process
Whenever you apply for a credit card or a loan, it leaves traces on your credit report. This is called a ‘hard check’, and if your credit report shows frequent hard checks in a very short span of time then your rating may fall.
You might wonder then how can you increase your chances of getting accepted without leaving traces on your credit report. The answer is that you can get an estimate with the help of online tools that tells your chance of acceptance based on your credit score and the criteria set by different banks. In this way you can judge which cards are the best shot for you.