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.
