How To Check Credit Score

Want to know how can I check my credit score? Well you have landed on the right article.

There has always been a lot of hype about maintaining a good credit score, and you might have wondered why it is so important? Since credit score is a measure of an individual’s ability to pay back the loaned amount, all the banks and financial institutions depend on it.

For every individual, tax filing is mandatory, and it is a good idea to maintain a good credit line. If you plan to take a home loan, car loan, consumer durables loan, or even apply for a credit card, a good credit score is mandatory for your application to be accepted by the lending institution.

In this article, we have covered the best methods of How To Check Credit Score.

How To Check Credit Score

What is a Credit Score?

A credit score is the numerical representation of the creditworthiness of the prospective borrower. It is a number between 300 - 900, and an individual always should aim for achieving a mark close to 900.

A credit score is based on the credit history of a borrower. It depends on how well the borrower has repaid their loans (repayment history), the number of active accounts, new credit accounts, utilization of the credit cards, the current level of debts, defaulter status, length of credit history, written off status, etc.

Most financial institutions use a FICO (Fair Isaac Corporation) scoring system to determine the creditworthiness of an individual. It is very important for the financial institutions to earn the interest on the loaned amount as that is how they earn their income.

However, more important is to ensure that their loaned amount is secured. FICO score was created by Fair Isaac Corporation, which is an analytics software company.

They use the combination of the borrower’s credit history to determine whether they want to lend the borrower, increase their lending capacity, or tenure of repayment.

The mortgage industry in the US primarily depends on the FICO scores of a consumer. Even though the borrower has an option of explaining the reasons behind being a defaulter if they have a low credit score, most of the financial institutions go by the data.

To maintain a good credit score, ideally, an individual should have a mix of accounts. Having 3-5 credit cards, 1-2 home loans, 1-2 personal loans, 1-2 car loans, a few personal loans during the entire credit period is a good idea.

• That will give an idea to all types of lenders about your style of repayment. There are borrowers who maintain a good repayment history for their credit cards as they know that they will need to use them on a regular basis.
  
  
• However, sometimes they end up defaulting their home loan EMIs, as they know that the tenure for Home loan EMIs is several years (5-20 years) and it is highly unlikely that they will take another home loan in the near future.
  
  
• However, the borrower should not forget that the credit bureaus keep a track of all the types of borrowings and the credit score is impacted if any of them are defaulted with.

Directly from the credit bureau websites-

Credit information bureaus will allow one free credit score check per year. If you need to check your credit scores more frequently, you need to convert your account into a paid account.

Step 1: Go to the website of the credit rating company- CIBIL website, CRIF Highmark website, Experian website, or Equifax Website.

Step 2: Login using your login credentials or create a new account. You need to enter your name, e-mail address, contact number, PAN card Information, and DOB to create an account.

Step 3: To authenticate your identity and link your PAN card and Aadhar card to your credit report, you will need to upload them in the required field. You can even upload your scanned passport for address verification. Now you will need to submit the form.

Step 4: It will ask you to choose a plan to receive numerous credit reports. You may choose ‘’No Thanks’’ if you want only one credit report.

Step 5: The credit agencies will send an OTP to your registered phone number and e-mail ID to verify them and link them to your account.

Step 6: Once your credentials are verified, you can log in, go to the dashboard and view your credit score. Your complete credit report will be delivered to your registered e-mail address.

From your bank

A number of banks allow customers to check their credit score once a year for free through their websites. You need to log in to your net banking website to check that.

Using third-party websites or apps

There are multiple third-party websites and apps you can use to get your free credit report. The best part about these sites is that you can have multiple reports free of cost.

• CIBIL – the CIBIL app is authentic, and it lets you check your CIBIL score, and credit report every 24 hours. You can subscribe to get alerts about changes to your credit profile, free loan offers as per your ratings, and much more.
  
  
• Experian – The Experian app offers regular credit report updates and credit monitoring with alerts completely free of cost. You can check your FICO score anytime.
  
  
• Mint – the Mint app powered by renowned company Intuit allows you to track your finances (balances, spending analysis, budget, credit score analysis, and credit alerts all in one place. The credit scores are provided by Equifax.
  
  
• Paisabazaar- You can check all the four credit reports (CIBIL, CRIF Highmark, Equifax, and Experian) all in one place, completely free of cost.
  
  when you opt for bankbazaar credit score, they will send notifications to your e-mail and registered phone number every month for you to check your credit score, and they will also send an analysis of the fluctuation in the score. They will also provide tailor-made offers for credit cards and other loans for which you are eligible. It is up to you to avail them or not.

• OneScore – The OneScore app allows you to check your credit score from CIBIL and Experian. The app will give useful tips on how to improve your credit score, and if you follow them diligently, then in no time, your credit scores will improve.
  
  There will be customized alerts on changes to your credit scores from the app.
  
  
• Bankbazaar- This app too will allow you to check your credit score along with the important updates like the total outstanding loans you have with all the lenders, the total number of active accounts, default calendar, etc.
  
  There will be customized alerts from the site for you to avail the offers from various lenders. Representatives will call you to explain the features and benefits of those cards and loans you are eligible for.

There will be many comparison tools available at your disposal for you to choose the best credit card and home loans, etc., as per your needs.

• IndiaLends – Being one of India’s first credit score and analytics apps, it analyses and offers the lowest interest rates for the loans you need.
  
  
• CreditMantri –  CreditMantri also allows you to download a free credit report as many times as you wish. It is powered by Equifax, and you can check all the tools like – small loans, business loans, credit improvement services, flexible repayment services, etc., and take up the one which suits you the most.
  
  
• ETMoney – The ETMoney app lets you know your credit score in 30 seconds. It will give insights to improve it, offer curated loan options which match your score.

Credit Score Range and What It Means

Credit score range is calculated using five variables—payment history (it checks for the number of months the borrower failed to pay on time), amounts owed, length of credit history, credit mix, and new credit.

All the four credit bureaus have their own ranges, which are explained here-

CIBIL

Experian

CRIF Highmark

Equifax

Now you might be confused if you check your credit score in all four credit bureaus. Somewhere it will show that your score stands as ‘’Fair,’’ which means that your creditworthiness is not very high.

And in some report, it might even show as excellent. You might be wondering that with the same tenure, repayment history, and mix of credit lines, why is it so?

All four credit bureaus have their own way of calculating the credit score, and hence with the same profile, there might be a difference in the scores. Also, the lenders do not submit the credit report to all the bureaus simultaneously.

If you check the last updated report in each of them, you will realize that some of them were updated six months back. You might have paid back a huge loan or might have closed some loans during that period.

You might even have opened new accounts, which is an important factor while assessing your creditworthiness.

You should not get worried about it and always try to maintain a good credit repayment history to ensure that your credit health is good. The credit score range determines your ability to manage your money and credit lines.

An individual with a higher credit score and falling in the highest bracket for all the four credit bureaus is considered a favorite person for all the lenders. 

How is your Credit Score calculated?

All four credit agencies use their own scoring models. Let’s understand how it is calculated for CIBIL, which most banks and NFBCs rely on.

• Your repayment history- This contributes to about 35% of the score. It depends on all your accounts collectively, and it depends on the number of months you made the payment on time and the months you missed the due date.
  
  
• Hence, it is very important to make timely payments for all your credit cards and loans as this component has a very high weightage. You should at least pay the minimum amount due for your credit card to ensure you get a green mark for that month for that card.
  
  
• Your credit balance and utilization- This component contributes to 30% of the score. Hence it is always advisable to use all your credit cards regularly. 
  
  
• Even if you have cash in your bank account, it is a good idea to avail of the interest-free credit period and utilize that money in some investments. It also depends on your credit utilization ratio. It is calculated as the outstanding balance on all your loans and credit cards.
  
  
• If you have utilized most of your sanctioned credit, then you will be considered as a risky borrower. If you are planning to take a huge loan, it is better to clear off your pending dues before you apply for a new loan.
  
  
• Duration of borrowed credit- There is a 15% weightage to this score. This refers to the repayment duration and how prompt you were while paying off your loans.
  
  
• Hence, for credits extended for years together, do not be a defaulter and keep paying the regular EMIs even if you need to cut your expenditures for that.
  
  
• Your new credit-  This component too has 15% weightage. Every time you enquire for a new credit (hard search), your credit scores are lowered. It shows that you survive on credit, and the lenders might consider you a risky borrower.
  
  
• Your credit mix- This component contributes to 10% of your credit score. It is always advisable to have a healthy mix of credits like- long-term, short-term, credit with collaterals and without them.
  
  Hence if you have a home loan, collateral on your other property for a business loan, a couple of credit cards, it is a healthy mix of credit.

What is considered a good credit score?

As per the tables mentioned above, a good credit score for CIBIL is anything above the 700 mark. For Experian, your score needs to be around 800 to be considered as a good score. For CRIF highmark, it needs to be more than 650, and for Equifax, it needs to be more than 670 to be considered as a good credit score.

If you understand the way your credit score is calculated, you will be able to improve it. Here are some of the tips for you to improve it-

• If the loan can be approved based on the financial situation of one individual, then do not be a co-signer for it just because you are the spouse or parent for them.
  
  
• Over a short period of time, do not process too many credit requests and show yourself as a credit-hungry individual.
  
  
• Do not take too many loans in a short period of time. You might be looked at as a person who is undergoing a financial crunch.
  
  
• Ensure that you pay the minimum amount due of your credit card on time. If you miss the due date, it impacts your credit score. Hence, if the due date does not align as per your paycheck, consider getting it changed.
  
  
• Use debt consolidation services if you are undergoing a financial crunch. It is better than your loans being written off to a collection agency which leaves a permanent black mark on your credit report.
  
  
• The amount which is sanctioned for your loan, it is better not to utilize the entire amount. The lenders will think that you are good with your money management and you managed with the partial loan.

Benefits of a good Credit Score

There are multiple benefits if you maintain a good credit score-

• With a higher credit score, you will receive more favorable credit terms, which means your interest rate will be low, and your tenure of credit will be extended.
  
  
• More banks and NBFC (Non-Banking Financial Company) will be interested in extending loans to you.
  
  
• There will be less disappointment if your credit score is good, as you might have selected a good property or car and require a loan to purchase it. As, if you don't get the finance on time, you might end up losing it.

What Hurts Your Credit Score?

Now since you know the benefits of maintaining a good credit score, you must be wondering is there anything can negatively impact my credit score.

• Missing the due date for paying EMIs.
  
  
• Having dormant credit cards. Multiple unused credit cards eat up your credit eligibility amount, and you might not be able to get the necessary loan when you need it.
  
  
• Overindulging and taking more credit than you can repay on time. If you have made such a mistake, it is advisable to borrow money from friends and family and pay at least the minimum amount due.
  
  
• Loan application rejection from a bank. The loans and credit cards application history from one bank or NBFC is normally retained for at least six months. Hence, if your application was rejected by one bank, do not reapply there the very next month. Give about a year’s time before you reapply.
  
  
• Delaying loan repayments. If you are taking large loans for a home or business, along with the monthly EMIs, try to make part payments. Whenever you receive a bonus, or your mutual fund, fixed deposit, or some other instrument matures, make a part payment.
  
  This will reduce the tenure of your loan, and the lender will get the confidence that you want to close the loan sooner than the stipulated time.
  If you do not do this, it will not hurt your credit score as long as you are paying the EMIs on time, however, it delays the process of you going for other loans. If you have got a better job, instead of increasing your standard of living, it is better to focus on paying off the loans
• Multiple collaterals will make other borrowers think that you are a high-risk borrower. Try to negotiate and take unsecured loans.
  
  
• Previous bankruptcy records will impact your creditworthiness for at least seven years. During that period, ensure that you build wealth and do proper savings to give confidence to the lenders that you did make a mistake once, but you have learned from your mistakes.
  
  
• Any criminal charges and jail term will impact your creditworthiness badly. Lenders are afraid to lend money to ex-convicts. They think that if they repeat the offense and go to jail again, their money will turn into a non-performing asset.
  
  
• Multiple divorces impact the creditworthiness of an individual if they were the primary breadwinners. A divorce ends up in asset division between the erstwhile spouses, which means that your net worth is decreasing.
  
  If there is a child support element involved, the lenders become more wary of extending credit to that individual. Hence do not tie the knot unless you are completely sure and get a prenuptial signed to safeguard your assets from gold-diggers.