Importance and how to check and monitor your CIBIL Score or Credit Score?

Importance and how to check and monitor your CIBIL Score or Credit Score? | Vrid
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Did you know there is a possibility that in a few years, not just bankers but your employer, landlord and your partner will check your CIBIL score or credit score?

And we want to prepare you for it. In this post, we’ll shed light on the importance of checking your CIBIL score and provide a step-by-step guide on how to check and monitor your CIBIL score. This will help you improve and maintain a good credit score.

Estimated read time: 3 minutes and 40 seconds

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Buckle up. Here we go!

What is a CIBIL Score or Credit Score?

Before we delve into the ‘how-to’ aspect, let’s understand the CIBIL score. 

A CIBIL or credit score is a three-digit number reflecting your creditworthiness. It represents how likely you are to repay your loans. It is a crucial factor when you apply for loans or credit cards.

In India, the CIBIL score range from 300 to 900, with a higher score indicating better creditworthiness. Lenders use this score to assess the risk of lending to you. 

A high CIBIL score implies responsible financial behaviour. A low score could lead to loan rejections or higher interest rates. If you want to know how your CIBIL or credit score is calculated and how to improve it, read here.

Importance of checking your CIBIL score

1. Ensure accuracy of information 

Sometimes you may have a low CIBIL score because of an error/ inaccuracy of information in your credit report. If that’s the case, you should report it immediately to the concerned credit bureau and your bank to get it corrected. 

2. Improve your CIBIL score 

Checking your CIBIL score regularly can help you monitor your financial actions. This way, you’ll know if your actions are affecting your CIBIL score positively or not. If you know what may bring down your CIBIL score, you will be able to avoid that.

How to check and monitor your CIBIL score?

Now that you understand the importance of checking your CIBIL score, let’s explore how to check and monitor it regularly.

Step 1: Choose credit bureaus

In India, several credit bureaus provide credit scores. The prominent ones are CIBIL (Credit Information Bureau India Limited), Equifax, Experian, and CRIF High Mark. For a comprehensive view, we recommend checking your score with multiple bureaus because credit scores from each can be different.

Step 2: Access your credit report

To access your credit score, visit the official website of the credit bureau of your choice. Look for the ‘Get Your Credit Score’ or ‘Check Your Credit Score’ option and follow the instructions. 

Since 2017, the Reserve Bank of India (RBI) has made it mandatory for all four credit bureaus in India to provide consumers with one free credit report and a credit score every calendar year. This effectively means that you can get four free credit reports every year. 

Utilise this to check your credit report regularly to avoid any surprises, such as fraudulent activity or unwanted credit queries.

Step 3: Provide personal information

To ensure accurate results, you’ll need to provide personal details such as your full name, date of birth, PAN card number, and contact information. Rest assured, these bureaus are secure and handle your data with the utmost confidentiality.

Step 4: Authenticate your identity

Once you’ve entered your information, the bureau may verify your identity. This could involve answering some questions based on your credit history or providing a one-time password (OTP) sent to your registered mobile number.

Step 5: Get your credit score and report

After successful authentication, your credit score and detailed credit report will be displayed. Your credit report provides insights into your credit history, including past loans, credit card usage, repayment patterns, and any overdue or defaulted payments.

Step 6: Check for errors

Review your credit report meticulously to identify any errors or inaccuracies. If you spot any discrepancies, raise a dispute with the credit bureau immediately. Correcting these errors can positively impact your credit score.

Step 7: Monitor regularly

Credit scores are not fixed. They change based on your financial behaviour. Make it a habit to monitor your credit score periodically, ideally every 3 to 6 months. Consistent monitoring helps you stay on top of your financial health and quickly address any red flags. 

Also, these days, many apps are providing free credit score checks. It’s easier to check your credit score on these apps than on the credit bureau’s website. 

But we don’t recommend using these apps because many people suspect they sell your data to financial institutions. You may receive calls for new credit cards or loans after checking your credit score for free from these apps. So be careful. 

Your credit score is a pivotal component of your financial journey. It can open doors to better loan acceptance rates, lower interest rates, and credit cards. 

Remember, responsible financial habits lead to a better credit score, which in turn sets you on the path to financial well-being. So, take charge of your financial future by being aware of your credit score and making sound financial decisions.

Also, if you want to know whether credit cards are important and does it affect your personal finance, read here.

Remember to share these insights with your buddies.

Still Curious?

If you are like us, who likes to analyse a little more or check out content in different formats, well you are in luck. Below you can find some suitable content we found.

Cred – How to Monitor your Credit Score?

CIBIL – Dispute Resolution

Society of International Law & Policy – The Social Credit System and India: A ‘what if’ Scenario

Note: We don’t have any affiliation with them. We are sharing links only for educational purposes. The opinions expressed by them belong solely to them and do not reflect the views of Vrid.

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DISCLAIMER: This newsletter is strictly educational and is not an investment advice or a proposal to buy or sell any assets. Please be careful and do your own research.

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