Are you planning to apply for a loan or a new credit card? Or, you simply want to track your financial standing. There’s one way to know your credit health — your CIBIL score. It’s a 3-digit score that indicates your creditworthiness. Lenders usually evaluate your credit reports to determine your credibility before granting you a loan or accepting your credit card request. In simple terms, a credit score shows how likely you are to make your loan repayments on time. In this post, we’ll walk you through how websites that claim to offer “CIBIL score check free” services work, how often you can check this score, and what the credit score says about your financial standing. Let’s take a look.
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Understanding Credit Score and Its Impact On Your Credibility
When lenders review your profile, they consider several parameters to assess your credibility. A credit score is one such factor that suggests your ability to pay the loan or the likelihood of default.
The score is available on a credit report, which calculates your trustworthiness based on several factors, such as your history of loan repayments, number of unpaid loans, any recent credit inquiries, types of loans you’ve borrowed, and so on. A good credit score won’t just help you get a loan easily, but you can obtain a loan with competitive interest rates.
Here’s what a credit score means:
- 750 – 900: Excellent (good chances that you’ll secure a loan quickly and with reasonable interest rates)
- 700 – 749: Good (Likely to get good terms on loans)
- 650 – 699: Fair (You might get approved for a loan, but it’s difficult to get reasonable interest rates).
- 550 – 649: Poor (it’s difficult to find a lender willing to accept your loan application).
- Below 550: Very Poor (Highly likely to face loan rejection)
The higher the credit score, the lower the risk for the lender, and the better your chances of getting a loan with good terms and a low interest rate.
How to Check Your Credit Score Within Minutes
First things first, find a reliable site that allows you to check your CIBIL score without affecting your credit report. Stashfin, for instance, is people’s most preferred choice for assessing their credit health. Here are the steps for tracking your credit standing:
Step 1: Visit the website and choose a suitable plan.
Step 2: Type your mobile number. Enter the OTP sent to your registered mobile number for verification.
Step 3: Enter all the required details, like your full name, PAN details, date of birth, and PIN code.
Step 4: Wait for the report to generate.
Step 5: Check your detailed credit report. You can refresh it every month or as frequently as you want to evaluate your credit rating.
Why Should You Check Your CIBIL Score?
Here’s why watching your credit standing is crucial:
Know Your Credit Health: You might not be applying for a loan right now, but you might need one in the future. A credit score speaks volumes about your borrowing power (the chances you can get a loan when needed). Knowing your creditworthiness will help you plan your credit requirements accordingly. Doing it regularly will give you time to take action to improve credit score, such as repaying your existing debts or making timely bill payments.
Identify Errors: Sometimes, your credit rating drop because of incorrect information. Generating a credit report will help you spot these errors and have them rectified. This improves your chances of getting a loan, which would otherwise get rejected due to a low credit score.
Identify Fraudulent Activities: If your credit profile score has been fluctuating frequently, you may want to check the score to ensure your account is protected from fraudulent activity. Fraudsters can misuse your credit card or borrow a loan under your name. You won’t know until you see your credit report and spot unusual transactions.
Track Your Financial Growth: Your credit report shows all your financial activities, debt repayment history, and other metrics that help you assess the areas you can improve. If a specific action, such as late bill payments, is affecting your credit profile score, you can work on it to improve your score.
Factors Affecting Your Credit Score
Here’s what contributes to a credit score:
Payment History: Your payment history shows whether you make timely payments for utility bills, EMIs, and loans. Your credit rating will drop if you repeatedly make late payments.
Credit Utilization Ratio: This shows how much credit limit you are using. The lower, the better. Aim to keep the credit utilization ratio below 30% to maintain a good credit score.
Credit History Length: People who’ve recently opened a new credit card or borrowed money for the first time won’t be considered as creditworthy as those with a lengthy credit history and responsible borrowing and loan repayment habits.
Credit Mix: Do you have a single type of loan or a mixed variety? Having a credit card, a personal loan, and other types of loans is better for your credit health, as it indicates your ability to handle multiple credit types efficiently.
Limit Hard inquiries: When you apply for a new credit, the lender will evaluate your credit file to assess your creditworthiness. This is considered a hard inquiry, which can drop a few points from your credit score. The effect of a hard inquiry can last a year. If you’ve applied for multiple loans or credit cards in a short timeframe, your credit score might drop significantly.
Note: Know that soft inquiries, such as checking your credit report to know your credit health, do not affect your score.
Conclusion
A credit score is a vital factor that affects your ability to secure a loan in the future. Assessing it regularly will give you insights into your borrowing and repayment habits. A few steps, like paying your bills on time, keeping the credit utilization score low, avoiding hard inquiries, and keeping unused credit cards open, can go a long way in improving your credit score.