A credit score is a representation of your credit worthiness. Let us take an example; if you are an individual who has availed of an instant loan once or more than once, it will reflect repayment behaviour in your credit score. Therefore, the credit score will be helpful to the lenders in determining whether providing a loan to you is a sound idea or not.
In India, most lenders check CIBIL scores to determine credit-taking capabilities. So check CIBIL score regularly to stay on top of your credit-taking capacities, which will also open up new avenues for better deals in the future. If you maintain a credit score above 750, then you have a good credit score.
Here are 5 reasons why you need to check credit score regularly:
- Stay aware of the effect of your actions on your credit scores: Checking credit scores regularly will help you monitor your financial actions in a better way. If your credit score reduces, you can take action to improve the scores. If you check CIBIL score regularly, you will slowly understand the impact of your spending habits and realise the various parameters that go into determination of your score.
- Ensure accuracy of information: At times, if there is an error in the representation of your credit scores, you can rectify it on time before it affects your monetary health on a drastic scale. Connecting to the concerned credit bureau in order to solve this issue at the earliest. It will help you keep your credit report error-free.
- Know your financial stability: If your credit score is healthy and improving, it is an indicator that you are on top of your financial health and improving. It also indicates that you are making wise decisions when it comes to making payments of EMIs and other things. By making sure to check CIBIL score regularly, you stay on top of your finances.
- Determine when you deserve a better credit card or a loan: When your credit scores are in green, you are in a position to receive better deals with respect to credit cards or loans. All lenders look for an applicant with a good credit score, which is when they are willing to offer better deals to such applicants.
- Detecting frauds early: Identity theft cases are on the rise. It is why it is imperative for you to monitor your credit reports regularly. By checking the scores regularly, you are in a position to monitor any suspicious activity on time and rectify it.
- Monitor your Credit Utilisation Ratio (CUR): Credit Utilisation Ratio (CUR) is a ratio that indicates the proportion of credit that you have already used up and helps you determine to what extent you can borrow money in the future. If you are someone who is maxing out credit cards frequently, then this will have a negative impact on your credit score. It is ideal for keeping your credit utilisation rate below 50%. It is one of the major reasons why you need to check CIBIL score.