You can get a full understanding of your Credit Score by studying your credit report. Here are the things you should know before checking your Credit Score.
People didn’t know about the existence of Credit Scores up until recently, let alone knowing about the impact they have on loan and Credit Card applications. However, recent growth in the fintech sector, as well as an increase in awareness about personal finance topics, have fuelled the curiosity of people to learn about money management.
People are reading articles, following personal finance blogs and asking relevant questions on forums to aid their understanding of how banks and other financial institutions work; what their investment options are etc.
These new learnings have brought information on Credit Score to the fore as well. However, there is much to be learned about this topic. Most people are just content with checking their score. They barely check their report, which is a real treasure trove of information regarding their credit history.
Like many others, if you too are still learning about Credit Scores, then this article will definitely help you along your way. We’ll tell you how you can get a full understanding of your Credit Score by studying your credit report.
Additional Reading: The Mystery Of The Zero Credit Score
Here are the things you should know before checking your Credit Score
- Look out for errors on your credit report
- Check for signs of identity theft
- Check your account information
- Ways to dispute an error
Make sure there are no errors in reporting by the lender
You should check your credit report at least a couple of times a year. Checking your score once every quarter is certainly advisable and can be especially beneficial before applying for a loan or Credit Card.
This is because when you submit your application, the lender will first check your Credit Score/report. So, you need to ensure that you have a good score and that there are no errors in your report that can lead to the rejection of your application.
An error-free credit report showcasing a score of 750 and above can help you avail a feature-loaded Credit Card or the best terms on a loan. There is a good chance that your lender might have made a mistake in reporting your credit transaction details in the past.
- The first thing you need to do is read the whole report.
- Check for the outstanding amount on your Credit Cards and loans. You might have cleared the amount, but it may not reflect in your credit report. This needs to be corrected as soon as possible since it can lower your Credit Score.
- When you spot an error in your personal data, address, outstanding balance etc., immediately report it to the credit reporting bureau (CIBIL, Equifax, Experian, HighMark). Also, contact the creditor/bank/lender who reported the wrong information. You can raise a dispute with a credit bureau for correction. More on this later in the article.
It is very important to maintain a high Credit Score so that you can have a healthy financial future. It helps you avail credit on the best terms from banks and other financial institutions.
Additional Reading: How Does Bankruptcy Affect Your Credit Score?
Check for stolen or duplicate identity
Identity theft is quite prevalent these days. One way to keep yourself safe from ID theft is by changing your net banking passwords and Credit Card PINs regularly. You can check for fraudulent activities in your report by looking at the enquiries section.
For instance, if there is a loan application reported in your CIBIL report not initiated by you, then you can be sure that it is a case of identity theft. What you need to look for while checking for possible frauds are:
- Loan accounts that were not initiated by you
- Credit inquiries that you did not make
- Late payments or defaults that you did not make
- Wrong address and other identifying information
- Wrong phone number
When you suspect a case of identity theft, report it to the credit bureau that issued the report and notify the bank immediately.
Check your account information
A majority of the information in your CIBIL report is your account information. You need to
- Review your accounts – check your loans and Credit Card accounts.
- Cross check your credit limit, current balance and payment history.
- Make a note of the accounts that are inactive and were closed.
- Make a note of the late payments and their negative remarks.
- Check for active loans and Credit Cards.
- Organise paperwork relating to your accounts and keep the details in order so you can track them easily.
Additional Reading: How A Poor Personal Credit Score Can Damage Your Business
Dispute resolution process
- Read your CIBIL report and spot the mistakes.
- Submit an Online Dispute Form at the relevant bureau website.
- The relevant section will be marked as ‘Under Dispute’.
- Then the credit bureau will take the matter up with the lender concerned. The lender will then accept or reject the dispute.
- When the dispute is accepted by the lender, the correction is made.
- The ‘Under Dispute’ remark will then be removed from the section.
The turnaround time for the dispute resolution is 30 days. Ensure you have all the relevant proofs before you decide to file a complaint.
By doing all the above you will know the outstanding balance on your accounts and also you can keep a track of everything. By checking and correcting discrepancies in your report, you minimise the chances of your loan and Credit Card applications being rejected.
It is an individual’s responsibility to check their own report and not the banks or the credit bureaus. You can check your Experian Credit Score for free on BankBazaar.com. There are no hidden charges and you can check your Credit Score as often as you want.