If you have started using a credit card or took a personal loan recently, it is recommended to first check the credit score. For the unversed, a credit score is a three digit number between 300 to 900 which indicates creditworthiness of the customer. Higher the score, more credible the customer is and lower the score, less credible the customer.
It is highly recommended to keep checking the credit score from time to time. Here we list out the key advantages of checking the credit score on a regular basis– at least once a year.
Advantages of checking the credit score
I. Enables you to improve your score: By finding out what is affecting your credit score (high credit usage, late payments), you can take specific steps to improve it.
II. Awareness of financial health: It gives you a fair idea of your creditworthiness, helping you understand how banks view you.
III. Helps detect fraud early: If your credit score suddenly falls or there is unfamiliar activity, it could show identity theft or errors on your credit report.
IV. Better loan terms: Finding out your credit score enables you to apply strategically for loans and credit cards, thus avoiding hard inquiries that can hurt your score and raising your chances of approval with favourable rates.
V. Big purchases: If you are planning to buy an expensive item, say a car, then checking your credit score in advance gives you time to strengthen it before applying for a loan.
VI. Does not affect your score: A number of platforms offer a service of free credit score. And it does not impact your score since checking the score leads to a soft enquiry.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
