ABCs Of Your Credit Score - An Interaction With Mint

Credit score and credit report are one of the key documents required to get a loan. If you have a good score, you can also negotiate interest rate and other charges with your lenders. In fact, some banks, such as Bank of Baroda, give you loans at a cheaper rate if you have a good score. Did you know that you can get at credit scores for free at least four times annually? Here is how:

Free credit score
Did you know that credit information companies have to give you one credit report every year free of cost? Since 1 January 2017, the Reserve Bank of India (RBI) made it mandatory for all credit bureaus to provide one credit report free of cost. Considering that there are four credit information companies in the country – Transunion Cibil Ltd, Equifax Credit Information Services Pvt Ltd, CRIF High Mark Credit Information Services Pvt Ltd and Experian Credit Information Company of India Pvt Ltd — you can get four free credit reports from the bureaus.

Besides the bureaus, fintech companies also offer free credit scores. “There are third party providers who partner with credit bureaus and provide free credit scores and credit reports to the end consumers. So essentially the channel through which an individual can get credit report for free is manifold now and not just limited to credit bureaus," said Parijat Garg, vice president, CRIF High Mark.

The acess
In case you opt to get your credit report from credit information companies, you will have to visit the individual websites of the companies. For instance, if you go to the Cibil website, you will find a link on the home page to access your free credit report. First, you will have to create your username and password. Next you will have to fill details such as name, date of birth, identity proof and contact information. After you are enrolled, you will get your score on the dash board.

According to the website, the score mentioned reflects your credit score, which is used by loan providers to evaluate loan applications. An individual’s CIBIL score ranges between 300 and 900, and is calculated basis the information in the accounts and enquiry section of the credit report. Some companies ask you to submit the identity proof documents via the app or by email.

Then there are third-party websites, such as Wishfin and Paisabazaar, which give free credit report on their platform. In fact, Paisabazaar.com gives access to scores from Experian, CRIF Highmark and Cibil. Besides the score, it also gives you information such as payment history, credit card utilization, if any, age of credit history and total number of accounts.

Importance of credit score
First, availability of credit score and credit report allows you to keep a check on your credit performance. “The data used by each bureau is the same. Only the algorithm might differ slightly. When it comes to a good score, each bureau has a different cut-off. In case of Cibil, the cut-off score is 750; for Experian, a good score would be 780; and for CRIF High Mark, 700. Having too many credit scores of the same base data may confuse the consumer so it is better to stick to one," said Hrushikesh Mehta, country manager- India, Clearscore.

Next, in case you want to rectify it, you can improve your credit behaviour by making repayments on time. However, do keep a tab on your credit report and credit score to avoid any kind of loan rejection owing to a low score.

Original Source: LiveMint