Ever thought of owning a house or a car or buying an expensive electronic good on EMI? If the answer to any of the above question is yes, then you might have also thought of availing a loan or getting a credit card to meet your financing needs.
But before you apply for a credit card or a loan, for that matter, you need to know what a credit score is. Read on to know more:
What is Credit Score?
A credit score is essentially a three digit number or a mathematical expression, basis an analysis of your credit files. In other words, your credit score is just a reflection of your creditworthiness, wherein the score is a parameter in order to determine the likelihood of you repaying a debt, in full. The credit score is typically based on credit information, one that is generally supplied by a credit bureau.
Why is it important?
- Helps you get the required loan amount or a credit card of your choice
Besides your age, income and other factors, the credit score is another important criterion that would determine your eligibility for a loan or a credit card. A score of 750 or above is considered to be good.
Although you would be able to avail a loan even if you fall short of the 750 mark, a higher credit score gets you exactly what you might need the most. For instance, with a good credit score, chances are you would be able to take out a loan subject to favorable terms and conditions and a flexible repayment tenor that fits you best.
- Expedites the process of getting a loan or credit card
Your credit score helps lenders assess your repayment ability. Thus a higher credit score is a reflection of your sound financial health and can expedite the process of getting a loan or a credit card.
- Helps you maintain financial health
Even if you might not need a loan or a credit card just yet, you might still want to keep a tab on your credit score. This is because the simple three-digit number tells you about your financial history; thereby allowing you to keep abreast of previous debts and take corrective measures to improve the score.
How can you check your credit score?
Credit scores in India are generated by credit bureaus. You can check your credit score through any of the credit bureaus such as CIBIL, Equifax, Experian, etc. Each credit bureau uses its unique algorithm to arrive at the credit score.
You can check your credit score from multiple bureaus and average them to arrive at the actual figure.
Finally, a small word of advice; check your credit score regularly, even if you don’t have a credit card or plan on taking out a loan. This would help you in identifying possible cases of identity theft or fraud.
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This content has been created in association with YONO SBI.