Many people realize the important of a credit history and credit score at the time of applying for a loan. It would be too late by then, as inaccurate information on the credit report can potentially cause problems of credit denial or higher interest rates on loans due to lenders’ perceived risk. Besides these, identity theft is also increasingly becoming a big problem in recent times. Hence, it is recommended that the credit reports be reviewed at least once annually to ensure that inaccurate information is taken up with past lenders for rectification and you are not a victim of identity theft.
In India, the Reserve Bank of India mandates credit bureaus to provide a credit report free of cost to all those who apply for the same. These reports can be downloaded from the websites of the credit bureaus by furnishing basic information to authenticate oneself. A credit report per se is a record of past credit facilities availed and the number of credit applications made. However, a credit score is an indicator of how positively the credit report reflects on you.
If your objective is to check the accuracy of your past borrowing records, it is best to access the credit report. If the purpose is to evaluate how good your credit worthiness is, you can get a credit score to see where you stand. We recommend that you obtain these records at least 6 months ahead of applying for a major loan so that steps can be taken to improve the credit worthiness. Some of these steps include paying off overdue amounts, paying down balances and ensuring that everything is up to date. There is a lead time for creditors to report payments and details of current outstanding. Hence, an early head start is recommended.
A look at the credit score is the first step that would trigger corrective actions where required. Most lenders insist on a score of at least 650 for applicants to qualify for loan products. Having a good score will result in lower interest rates on loans. At LoanGyani, we help customers secure the best deals, comparing offers from different financial institutions and matching them with your credit scores.