Here’s How Often Should You Check Your CIBIL Score
Most Indians have grown up opining that living on credit is such a bad thing. Others believe that checking their CIBIL score often is such a bad thing. If you belong to any of these two groups of folks, then you’re in trouble.
Today, the internet is rife with countless articles on the importance of maintaining your CIBIL score above 750/900. Doing so goes miles in improving your chances of speedy loan approvals. Sadly, information on how often you need to check your CIBIL score is scarce or not available at all.
Due to lack of this important information, many people harbor wrong notions regarding checking their CIBIL scores. The truth is checking your score doesn’t have any negative impact on your report. Actually, it’s considered healthy practice.
Important Note: Numerous factors go into informing your credit score. Credit inquiries are certainly one of the factors. Actually, they account for 10% of your score’s calculation. That simply means that while you need to check your CIBIL score, you shouldn’t do it countless times within a short period of time. Doing so can negatively impact your credit score.
How often should your check your CIBIL score?
Before letting you know how often you should be checking your CIBIL score, it’s highly important to demystify a certain myth. It has to do with the fact that many people opine that every time you make an inquiry for your CIBIL score and CIBIL report, you obtain a negative marking. That is just a myth, not the truth. Unfortunately, that myth has made many folks to avoid checking their own score. Others keep wondering whether they’re doing the right thing.
Now, to answer the question above, checking your CIBIL score not less than once per year is an excellent financial practice.
Checking your own CIBIL score is considered as a ‘soft inquiry.’ It doesn’t affect or impact your score. Nonetheless, if credit card issuers or lenders request CIBIL to offer them access your records, (when you’re applying for a credit card or loan), it’s considered as ‘hard inquiry.’ That is because it’s normally recorded in your report’s Enquiry Section.
What is for sure is that loan applications with different banks can lead to hard inquiries in real time succession. They demonstrate ‘credit hungry behavior’ that definitely impacts your score negatively. Fortunately, when you pull out your own report at least once annually, it’s similar to performing a health check. You can rest assured that it doesn’t hurt your score in any way.
Does closing your credit card hurt your CIBIL score?
If you’ve maintained an excellent payment history on an old card, and you don’t have any outstanding balance on it, you shouldn’t bother closing it. Two major reasons inform this.
Primarily, the length of your credit is one of the factors that affect your CIBIL score. Consequently, if you’ve held your old credit card and have shown good credit behavior for many years, holding on to is an indication that you’re highly responsible with your credit.
Secondly, holding on to one credit card, ensures that you keep your utilization rate on the low. A low utilization rate is the other important factor that affects your CIBIL score.
How many credit bureaus maintain one’s records?
Most Indians that know about credit report and credit score think that it’s only the CIBIL that maintains their financial records. That is just a myth. Apart from the CIBIL, three other credit bureaus have your records.
So what does this mean exactly? It simply means that anytime you need to take a credit card or loan, the lender might access your credit report and credit score from of any of the three together with the CIBIL. Each of them boasts different scoring models. Consequently, your score may vary from one to another bureau. Nonetheless, the greatest news is that your credit scores tend to be highly correlated.
Therefore, if you an excellent credit behavior with the CIBIL, it means that even the others will consider your credit behavior to be good.
In summary …
After all is said and done, the most important thing you need to be worried about isn’t the number of times you check your CIBL score, but your credit behavior. Some of the factors that have a bearing on your score include low credit utilization rate, maintaining an ideal number of active loans and responsible use of credit. Consequently, as long as you maintain a good credit score, you don’t have any reason to be worried about when it comes to obtaining credit and checking your CIBIL score. That is for sure. Get your CIBIL free once per year directly from CIBIL.com
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