It is said that when you set out to do something, the fact that you have made a resolution to do is half the job done. The other half, of course, lies in its actual execution. Similarly, if you are planning on taking a big step to improve your credit reliability, then you must first know where you stand and then move ahead or work towards retaining that position. Confused how a credit score affects you in India in the present? Read on to know more.
How Credit Scores Affect us
We are all fond of the “jugaad” system where one relies on personal contacts to cash in favors and get the job done. When it comes to borrowing money, there are, of course, many unrecognized and risky private lenders who charge an incredible interest rate and who can help you in your time of financial difficulty. But ideally, you should strive towards maintaining a healthy credit record, which will be appreciated by financial and government institutions in the long run.
A credit score of 620 and above is considered acceptable when it comes to getting a loan or any other financial privileges from your bank or finance companies. When you apply for a loan, apart from verifying your identity and criminal records, all lending companies will check with CIBIL what your credit score is. If the score is acceptable, you will be eligible for the credit that you wish to get. If, however, the score is too low or there is no score revealed with your PAN, you are not considered a “good risk” by banks and the chances of your application getting rejected are very high.
How do I know where I stand?
India is one of the latest countries to join the credit rating bandwagon. A very popular and essential concept in USA and European Union nations, credit scores are maintained and provided by CIBIL when you apply for your credit score. With the payment of their required fee (you can also use online banking here), your report will be posted or emailed to you and you can check your credit score in private. The report will have the following details:
- Your name and contact details – the last few residences will be listed
- A list of all the loans and credit cards that you have, how your payment pattern with them has been and which of them are current and closed ones.
- Details of your employment.
- Details if you have ever been declared bankrupt and if you have been able to overcome it.
- An analysis of your debt to income ratio based on which the score is decided
Naturally, you must ensure you keep a close track of your expenses and get this report from time to time from CIBIL. If there are any discrepancies or if you wish any information to be updated, it is important you contact CIBIL immediately. Interestingly, if there have been any fraudulent activities using your PAN and there are unrecognized loans or credit cards in the report, you can investigate and get them removed against your PAN immediately.
Credit scores and reports are here to stay and you should get in touch with reliable guiding agencies if you require any help about the report and how your score can be improved.
Author: The author is a financial advisor and helps people in improving their credit score and is associated with www.creditclear.in.