Here Is All You Need To Know About Credit Score And Where You Can Get It For Free
credit score is basically a number that reflects an individual&rsquos financial history. For banks andlenders a high score indicates low risk and increases their confidence in extending credit to borrowers. A good credit score ranges from 751-900 and a poor one ranges from 300-650.
In today's time when people require loans or plan on making investments, it is important to know what credit score is. It is basically a number that reflects an individual＊s financial history. The number reflects the probability whether a borrower will pay off the loan in a timely fashion. For banks and lenders, a high score indicates low risk and increases their confidence in extending credit to borrowers.
Difference between a credit score and credit report
Credit score is only one part of the credit report. Credit report covers individual＊s entire history of dealing with loans and credit cards, including repayment history and status of each credit account. These factors along with other details, in turn form the basis of credit score.
There are different places you can check your credit score at, which give you the following information:
a. Credit score 每 Your credit score as provided by the credit bureau report.
b. Insights from your report 每 Important financial factors and how your profile fares on same
c. Account Information 每 Details of all your loans and credit card accounts
d. Credit Enquiries 每 Details of enquiries done by banks/financial institutions when you applied for new loan or credit cards.
The Bureaus
Credit score is offered by different bureaus. In India, they are 4 每 CIBIL TransUnion, Experian, Equifax and CRIF High Mark.
Each credit bureau as each has its own unique scoring model therefore your score will be different in each case. However, higher the score (closer to 900), the better it is for you.
All bureaus have access to similar information about your credit profile from banks/financial institutions and create their own scoring model to derive a credit score. Your prospective lender may decide to obtain your details from one or more of these credit bureaus when you submit a new loan or credit card application and hence, one should regard all score as equally important.
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Coming to the question if your score will be affected if you check your credit score, the answer is that when you check your own credit score or credit report, it is counted as a ※soft enquiry§.
Credit score remains unaffected no matter how many times you check your credit score for yourself. However, if banks or financial institutions check your credit report at time of new credit card or loan application, it is considered as a ※hard enquiry§ and impacts your score.
Credit Score Change
Your credit score changes according to changes in your credit report (addition or closure of credit cards or loans, update of information pertaining to ongoing credit accounts etc.). Banks and other financial institutions normally report your information to credit bureaus once every month which can trigger a change in score.
A good credit score ranges from 751-900 and a poor one ranges from 300-650. These are the parameters that decide your credit score-
- Repayment history of all your loans and credit cards
- Current outstanding balance against your loans and credit cards
- Credit age and ratio of exposure to secured vs unsecured accounts
- Credit enquiries done by lenders when you apply for new credit card or loan
Importance of credit score while applying for a new loan or credit card
A high credit score is definitely an asset when it comes to loan and credit card applications. A high credit score (closer to 900) implies that you have good financial history and lenders express high confidence in extending credit to such individuals.
Timing of payments affect credit score
Paying card bills and loan EMIs on time is generally the single most important contributor to a good credit score. Being late on any bill / EMI, for any length of time is considered a possible indication of future non-payment of debt and is viewed negatively by lenders.Avoiding late payments is the best way to ensure a good credit score.
Payment for credit report
Getting your credit report from ETMONEY is absolutely free. Also, they provide analysis of your report which is easy to understand yet highly insightful. In case you take your credit report directly from one of the bureaus, it comes with a cost that varies from one credit bureau to another.
