The first thing most financial advisers tell you to do is check your free credit report online. It’s an easy advice to give; something we have heard all too often! However, most of us don’t really understand its importance, or how to understand it. So here it goes:
It is like a report card of your borrowings so far. It contains detailed information on all your credit accounts. These accounts are loans or credit cards you hold right now or have held at any point in your life.
This score is between -1 to 900. It is assigned to you by the credit bureaus. It is like a grading of your credit history, classifying it into good, average or bad.
A good credit report is a report that shows mostly positive remarks on your credit history. It will also show a credit score of 700 or higher. It means that you have kept up with all your accounts, by making timely payments.
It is important for one simple reason: all banks and NBFCs will check it before approving your loan or credit card application.
Giving credit is risky for any financial institution. They want to be assured that you will be responsible with the money they give you. Thus, any financial institution will want to look at your credit history before giving you any form or credit. A good report would mean that they can give you their money without any worry.
There are various other benefits of a good credit report:
It is important to keep up with your report because it changes periodically. It is updated every few months, as and when the financial institutions report the data to the credit bureaus.
There are various benefits of checking your report in a timely manner:
It is obvious that you should keep up with your credit report. However, did you know that you can get your credit report for free online? All you have to do is fill in your basic details, and see your report. It is highly recommended that you see your credit report online at least once every three to four months to stay updated.