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How Often Should You Check Your CIBIL Report?

How Often Should You Check Your CIBIL Report?

  • By Saral Credit
  • May 20, 2022

In modern-day life, if credit cards are essential, just like it, the importance of a good credit score is undebatable. There are various advantages when it comes to credit cards. Credit cards can pop up at any time in the form of any emergency or fulfilling your needs. We all know that salary nowadays can't make any of us satisfied and enjoy the need for life. Credit cards can be the planned need for which your existing savings do not prove sufficient.

But the point to be noted is that a credit card must be aware of the credit score or the credit report. A credit score is a basic need for any credit card. According to the credit bureaus, the credit score is in the range of 300-900. A higher credit score represents your higher level of creditworthiness and for the good interest in your credit cards need a credit score higher than 700-750. Experts suggest you check your credit score and report at least once a year. To spot errors or fraud, one can often check the credit report to sense the credit health.

How Do You Check Your Credit Report?

You can check your credit score or report for free any number of times. A credit score is not a static number that always remains the same. It changes as per your repayments and the time scheduled by the banks or the lender. A continuous stream of prompt payments can uplift the score and defaults, or the missed payments can ruin your credit score. The best way to find where you stand is to go through your credit score from time to time; this also helps you know your creditworthiness.

Thumb Rules:

A lender usually uses your credit account information from the credit bureau, which helps them approve your applications if you are applying for a loan. You have the right to view your credit reports from credit bureaus. Here are some of the thumb rules for how often to check their credit reports to maintain the credit history.

  • Check your credit report from each major credit bureau four times a year
  • Even free weekly credit report is available from the four major credit bureaus
  • In many cases, one must check credit report more frequently, like when you suspect any kind of identity theft or when you are working on repairing poor credit
  • Last but not least, be aware of the free credit report scams, which can put your personal information at risk and lead to some extra expense.

Always remember customers are entitled to one free credit report from each of the three major credit bureaus once a year. It is better to check one in a few months and then to the next after a few months. This can make you updated about the credit report, and you don't have to pay any extra charges.

What's The Myth?

Credit Score Increases With Increase In Income: The credit score or the credit report is defined by your behavior with your credit. Missing EMI and late loan repayments can affect your credit score; your income is not related to your credit score. Income only reflects the repayment capacity of the loan.

Settling Down Your Credit Account Improves The Credit Report: First of all, the closing of the loan and the settling of the loan are different. People sometimes get confused between the two.

Closing is after the full repayment of the outstanding dues as per schedule; no outstanding amount remains, but settling your credit means the credit bureau will reflect the settled account in the report. If you have this "settled" in your report for a long time, your future loan application will be impacted.

It's Easy To Avail Credit Or Loan If You Have Never Taken Any Credit In The Past: People sometimes assume that if they have never taken any credit in the past, this can help them avail the credit. But for the lender having an active credit account and good repayment behavior is a must.

Having obligations in the credit account in the past can make you a defaulter, and showing indiscipline in maintaining the credit can make you a risky customer for any bank or lender.

Checking Credit Score Frequently Will Lower The Score: From the credit bureau, the lender always fetches your credit report to find out your creditworthiness. This is known as the "hard inquiry" Checking the credit score is very helpful; it never affects your credit report or lowers your credit score.

But if the lender, again and again, inquires about your credit score, then this can reduce your score as it takes you under the ‘credit hungry’ category. When you check your credit score, then this is known as the soft inquiry, and it is advised to check your credit report every two to three months to have the updated records.

Closing Old Credit Cards Helps In Uplifting The Credit Score: Why do we close old credit cards? We always complete them to get rid of the annual fees or when we just don't want them anymore. Before closing the credit card, one must consider a couple of aspects. In your portfolio, always make sure to have a good mix of credit products.

This shows your ability to manage different types of credit. If your credit history with the old credit card is not very long, then you can continue with the older credit card. When you close your credit card, your credit limit will reduce, which can impact your credit score.

Advantages Of Checking your CIBIL Report:

It helps you to uplift your credit score:

Keeping an eye on the credit score helps maintain a good credit score. If due, to any reason, your credit score falls, you can overcome the situation and can maintain it in the earlier position.

Makes you prepared while approaching the lenders: You can easily approach the lender for any kind of loan when you have a good credit score. Checking a credit report makes you confident and clear about the kind of loan you are applying for.

Enables you to get loans in better terms and interest: Everyone wants a loan at affordable interest rates. A good credit score helps in having the loan at lower interest rates. It helps one maintain financial health and avoid unnecessary issues after taking a loan.

Give you the power to negotiate with your lender: If you are the one who always believes in maintaining your credit score, then you can easily negotiate with the lender for good interest rates and other benefits.

Helps you to identify any error or fraud: Sometimes, due to misunderstandings or any other reasons, there can be error or fraud, but checking your credit score often can help you to identify the error to avoid any fluctuation in your loan.

You can correct any error on time: Correcting the issues or the error in time always helps one to make a smooth use of the loan and its benefits.

Key Situations In Which One Should Check Credit:

Before Applying For a Loan:  When applying for a loan, review your credit report 3-6 months before as it can give you enough time to correct potential problems. This should also be done if you are looking for a car loan or a personal loan.

Changing Job: Many employers will review your credit report just for a background check. It is done with all your concerns, so it is crucial to go through the credit report from time to time. You can lose your job just because of an unexpected credit report error.

When Your Identity Has Been Stolen: The best way to protect yourself from identity theft is by regularly reviewing your credit report. During the loan or credit card procedure, if your bank or creditor tells you that your personal information may have been compromised, then you must inculcate the habit of checking credit reports often.

In Case Of Divorce: If you have a joint credit account, then experts always advise you to keep your eyes on your credit report regularly. It is good to check your credit report every few months.

Also Read- Do Employers Check CIBIL Reports Before Issuing Offer Letters?

Having Agreement With The Creditor: Sometimes, because of some hardships, people negotiate a repayment agreement with the creditor, such as skipping or reducing the repayment amount; then, in this case, one should review the credit report to make sure that the creditor is honoring its commitment.

Other circumstances can also be there, like applying for insurance coverage, opening a new utility account, or requesting a new cell phone. There is a need for a credit report to be checked regularly because every lender will first visit your credit report to serve you better.

That said, you have now enough knowledge to decide when is the right time to check your credit score. Remember, frequent credit enquiries isn’t recommended, but timely checking helps you eliminate identity fraud cases or other errors in the report.