Let's check your credit score.

What Is Your Credit Score?

Consider your credit score as a rating that defines your creditworthiness in depth. This 3-digit number can make or break your life. At times, it may help you get what you need, and there will be times when you regret not improving it earlier. For your better understanding, this score is not influenced by any single factor but many, including:

• Payment history
• Credit utilisation
• Credit mix
• Check your identity easily and quickly with OTP
• Length of credit history.

A good score will go a long way for you. It will unlock better loan terms and credit card offers. On the other hand, a low score may limit your borrowing options and offer you some that may not fit your needs that well. Hence, regularly monitoring your credit score will be your gateway to better financial well-being!

What Is The Procedure Of Calculating Credit Score?

The complicated calculation of credit scores in India requires four credit information companies licensed by the Reserve Bank of India (RBI):

• TransUnion Credit Limited
• Equifax
• CRIF High Mark
• Experian

Banks share details regarding any transaction which impacts your credit score with all four credit bureaus whenever you participate in it. This thorough process helps Credit Information Companies keep up to date with your financial activities.

The result of the online credit score is identical no matter what bureau a bank consults to determine your score. Each bureau has equal authority, standing shoulder to shoulder with their counterparts.

After getting data from banks, the credit bureaus compile additional information on your financial habits from various other banks and financial institutions. They then process this data to generate a detailed credit report, which is the foundation of your credit score.

How Can I Improve My Credit Score?

A good credit score is important to getting financial independence and getting very good borrowing terms. But how to increase your score?

• Examine your credit report: Get a free, detailed credit report, including your Credit Score, from a leading agency. Scrutinise the report for errors and dispute them quickly to avoid a penalty in your score.
• Punctual bill settlements: A great credit score depends on a steady record of timely bill payments. Late payments eat into your Credit Score, so it is best to create reminders or automate payments to avoid this trap.
• Effectively manage existing debt Spend time cutting on your debts. Meeting payment deadlines and paying down credit card balances can help boost your score consistently.
• Optimise credit limits Consider increasing your credit limit to lower your credit utilisation ratio and boost your Credit Score. Nevertheless, be careful to prevent leveraging the augmented credit to accumulate additional debt.
• Embrace credit diversity A good credit mix of types like credit cards, retail accounts, and loans will help your score. But be cautious about opening a lot of accounts at one time, as it could backfire.
• Preserve long-standing accountsThe duration of your credit history impacts your Credit Score. Avoid closing old accounts, as this will erase your credit score and lower your score.
• Wise approach to new credit Proceed carefully with new credit endeavours. Each new credit application causes a hard inquiry, which somewhat lowers your score. Hence, only pursue new credit avenues when absolutely necessary.

While instantaneous improvement is not possible, consistent compliance with prudent financial practices can considerably improve your Credit Score over time. Rest assured, you can always check your credit score with Moneybip!

Why is Checking or Monitoring Your Credit Score Important?

Monitoring your credit score is extremely important for your financial health. It provides a window into your finances and guidance on how to borrow cash, use credit cards, and make various other financial transactions easily and safely.

Regularly keeping up with your credit score allows you to detect mistakes and discrepancies that could damage your credit. Having an excellent credit score improves your likelihood of obtaining good interest rates and loan terms, which further helps you save cash in the long run.

You take control over your credit score and also direct your financial road to attaining your monetary objectives.

Do Credit Inquiries Affect Your Credit Score?

The significance of credit inquiries on your credit score often eludes many. Yet, these inquiries show distinct influences on your financial standing. Credit inquiries are primarily categorised into two types. Both of them have different consequences.

Soft Inquiries – Minimal impact on Credit Score

Soft inquiries arise from instances like self-checking your credit score or when lenders conduct pre-approval assessments. These inquiries lack association with a specific credit application, thus leaving your credit score unaffected.

Hard Inquiries – Potential decrease in Credit Score

Hard inquiries materialise when seeking new credit, such as loans or credit cards. Recorded on your credit report, they possess the potential to marginally decrease your credit score.

Typically, a single hard inquiry may result in a reduction of 5-10 points. However, the impact could be more profound for individuals with fewer accounts or a shorter credit history. Keep in mind that this effect is transient and contributes to only 10% of your credit score calculation.

Understanding these disparities is important for adeptly managing your credit well-being. While soft inquiries pose no threat during credit evaluations, the prevalence or frequency of hard inquiries could signify to lenders potential financial strain or endeavours to secure large new credit lines.

If you are interested in keeping up with your credit score, explore our website for more!