Credit score is one of the factors that indicate a person’s creditworthiness. This score has the ability to repay debt. Maintaining credit scores is another important task. For this you also need to know your credit score. The question arises is how do I check my credit score? And is your credit score healthy?
Definition of credit score
A credit score is basically expressed as a definite number or credit rank. Evidently this number represents details on a person’s credit files and records of their history. In addition, credit scores include details with regards to your standings. It categories your score into various ranges like poor, fair, good, very good or exceptional. Moreover, you are likely to find other details about why your score is what it is.
This is the general idea of what a credit score is. Now, you are likely to question how do you check your credit score? As your score range helps various lenders understand your creditworthiness and what types of credit products you’re likely to get approval for.
Checking my credit score status
You can check your credit scores from various sources. There are various sites that avail facilities to check one’s credit score without any major interference.
Websites are a new way by which people are free to check their credit scores. There are various websites offering numerous ways to sign up and check your details.
Websites that are established by the Reserve Bank of India are the most legitimate path to check your credit score. The four major credit information companies licensed are Credit Information Bureau (India) Limited (CIBIL), Highmark, Experian and Equifax.
According to top ratings CIBIL has the most outstanding ratings compared to the rest.
CIBIL scores a person’s credit in a unique way. It’s a score that is basically a three-digit number ranging from 300 to 900. They consider a score of 900 as the best score.
How it works
It’s of utmost importance to check credit scores before you make any move to apply for loans and credit cards. One can achieve this by placing an online request on credit rating companies websites. These companies may have some charges for the service they provide.
There are numerous free credit scoring websites too but it’s important to know their terms and conditions before signing up. Credit scoring companies like Experian help clients understand how you’re doing credit-wise.
3 simple steps
Sites like CIBIL, Highmark, Experian and Equifax are legitimate websites recognized and licensed by RBI to carry out the task of administering credit score. These sites usually include 3 simple steps to generate your score.
- Enter the necessary details while ensuring it matches with your ID.
- Verification of your identity.
- A one time password is sent to your registered mobile number or email ID.
- After you’re verified, a report of your credit score will be available for you to view.
- You can also check out the customization of loan offers for you.
Simple right! By following these steps you can easily find out your credit score and plan your future steps towards a load or credit card.
CIBIL credit scores 750 or higher as a good score. Evidently , it’s important to achieve a higher score. Since this felicitates higher chances of load approvals. Nowadays, Banks and other lending institutions make it a point to check credit scores to assess whether you are worthy of credit.
More likely benefits included with a good score are, low interest rates, better repayment terms and quick loan approval.
Calculation pertaining to Credit Scores
Companies use quality algorithms to calculate the credit scores that take several factors into consideration. Each factor’s weight is different based on what companies take into consideration.
These factors include
- Repayment history
- Debt categories
- Credit balance
- Balance of secured and unsecured loans.
- The Number of loans taken.
- The Number of credit cards you possess.
There may appear a case wherein your credit score is deemed as poor or very low. This score can happen due to various unintentional actions. Now, let’s understand what factors help determine your credit scores so you know where you are going wrong.
- Payments history
A good payment history helps to facilitate good scores. It basically signifies the importance of punctuality. A person who is very punctual about bill payments is sure to procure a better score than a late comer. This is one of the factors that’s taken into consideration when allowing scores.
If you want to discard these negative points then make it a point to pay bills punctually.
- Debt Amount
This is another factor that affects credit scores. Experts advise that a debt ratio of below 30% is ideal. A debt ratio which is below 30% helps to keep the score moderate. And if you are searching to achieve the best score aim for below 7% debt ratio.
- Credit history
Credit length history also contributes towards your score. For this, they check how you use your credit, including your oldest and newest accounts. The basic idea to achieve a good score is by utilizing the credit over a longer period. The longer the utilization of the credit, the merrier the score.
These are a few of the reasons why your credit score may be deteriorating or labelled as poor. You can refer to the guidelines that are established when you get your credit score. They explain the reasons why your score is poor. Moreover, it briefs you about how to improve your score and what will help you.
If you face issues with late payments, you can consider payment automation. This helps to keep a healthy score of your credit.
When it comes to checking my credit score, I prefer doing it online. It’s very easy and simple to check credit scores. All you need to do is follow up the simple steps given above. Moreover, it’s almost free and easily accessible online. These are most of the important pointers one must consider when handing in a credit score. Hope this helps you effectively to help score better at your credits.