How to Monitor and Maintain Your Credit Score with A Profile?

Your credit score is a key indicator of your capacity to repay loans to lenders. A credit score is a three-digit numerical representation of your credit history. It is compiled in the Credit Information Report, or CIR, and is based on data gathered from lenders.

Financial organizations consider your credit history and score when deciding whether to give you money, how much, and at what interest rate. Credit rating firms like Credit Information Bureau (India) Ltd collect information and compile credit scores.

What is the Importance of a Credit Score?

A credit score is a three-digit number that indicates how creditworthy you are. When you apply for a loan or a credit card, it’s the first thing lenders look at. It provides them an indication of whether you’ll be able to repay the loan on time or not. As a result, maintaining a decent credit score is critical. Making all your payments on schedule, monitoring your credit reports frequently, paying off existing credit card debt, and keeping your credit utilisation low below 30% can help you maintain your credit score.

What factors go into Determining a Credit Score?

Each credit agency uses a different credit scoring model to calculate your credit score. Although your score may differ, the elements that each bureau considers are the same, and they are as follows:

• 35 % payment history
• 30 % credit utilization
• 15 % of people have a long credit history.
• 10 % credit mix
• 10 % new credit

A credit profile is a written account of a person’s or an organization’s credit history. A credit report reveals a person’s or an organization’s credit history and current credit usage. Identification information, credit history, public documents pertaining to disputes, and credit inquiries are the four main topics addressed in the credit profile.

Lending institutions favor borrowers with strong credit histories and reliable repayment records. A corporation is better positioned to obtain the necessary funds from lending institutions if it has a strong credit history. The same benefits are available to an individual in the form of loans with cheaper interest rates and quicker disbursal times.

• Make changes to errors:

You must promptly contest any mistakes by going to the official website, www.CIBIL.com. After reviewing your CIBIL report, you can decide which transaction is incorrect or with which you disagree. Within 30 days, you must respond to the disagreements and make the necessary corrections.

• Note Your Credit Usage Ratio:

Make cautious not to use your credit card for every purchase. Maintain a credit utilization ratio of no more than 30%. Your CIBIL score will increase because of doing this.

• If you get rejected, stop applying for credit:

Your credit report will contain information on any loan or credit card applications you have made and were denied. If you immediately apply to another bank, they may reject your application if they see your low score and the previous rejection. The best course of action in these situations is to refrain from applying again and wait for the score to rise.

• Reduce the number of applications submitted:

The fact that every time you apply for credit, the bank will request your credit report from CIBIL, and the inquiry will be noted in the report is another reason why you should refrain from applying for loans and credit cards too frequently. After each request for your report, the bank’s investigation could also lower your score. This means that even when you have every intention and ability to repay the loan or credit card on time, you have two disadvantages: first, you exhibit credit-hungry behavior, and second, your credit score declines.

• Repay your Debts:

Make it a priority to start being on time with your payments if there are any loans for which you have been paying late. You can ask your bank to assist you to restructure your debt if you are having trouble making ends meet with your existing EMI payments.

• On-time credit card payment:

The wisest course of action while using credit cards is to avoid exceeding the limit on those cards. Additionally, you need to make sure that you are paying back the entire balance or at least a sizable sum on your cards rather than just the minimum amount required.