What is Credit score?
Credit score is a three-digit numerical expression of a person’s creditworthiness ranging between 300-900. Higher credit score represents higher creditworthiness and vice versa. Credit score is calculated based on many quantitative and qualitative factors with various rule engines for individual bureaus. A few common factors are past payment history, credit utilization, types of credit, length of credit, recent credit enquiries, etc. Banks, NBFCs, credit card companies and at times even private lenders check credit score to assess the risk associated while lending money.
Importance of Credit Score
Credit scores play a crucial role in decisions made by the lenders. Here are some of the reasons stating importance of credit score:
- To determine approval of loan (for all type of lending facilities such as personal loans, business loans, home loans) or credit card application.
- Proven history of good credit score is always considered by banks while determining the interest rate to be charged. Interest rate charged by lenders are dependent on credit score of an individual. Higher the credit score lower is the interest rate charged.
- Higher credit limit can be granted to people with higher credit scores.
- Long term financial goals: To buy a home or to avail a business loan for start up good credit score is often a prerequisite for securing the necessary financing.
- Financial awareness: Monitoring your CIBIL score can alert you to any discrepancies or errors in your credit report that need correction. In case there is any discrepancy you can work on your creditworthiness to improve the credit score.
How to check Credit score?
There are multiple ways to check credit score. You can check your credit score through your bank, or through credit reference agencies or through fintech platforms. Transunion CIBIL is one of the platforms majorly preferred by the lending companies to check the credit score. One can easily check his / her CIBIL score by registering himself / herself on CIBIL.com. A basic requirement is your PAN card which is your identification number across the financial institutions.
Steps to check Credit Score using CIBIL for free
Any individual can check his CIBIL score by simply using any of these documents – PAN card, Passport, Voter’s ID, Driver’s License and Ration card number. Let’s take a look at how to check CIBIL score using any of the above KYCs at free of charge:
- Visit this website Cibil.com and click on get free CIBIL score and Report
- Click on “Get Free CIBIL Score & Report”
- A new page will appear where you have to enter details such as your email id, name, date of birth, pincode, state and mobile number. Select your ID type and enter your ID number. Ensure that the information you provide is accurate.
- Verify your identity: CIBIL may ask you a few questions to verify your identity. This is a security measure to protect your credit information.
- Receive your CIBIL score: Once your identity is confirmed, you need to click on create CIBIL report, you’ll receive your CIBIL score along with a detailed credit report. You can review the report for accuracy and check for any discrepancies.
- Free CIBIL score refresh is available to you in every 60 days.
- You can download or print your report: You can download a PDF copy of your CIBIL report for future reference. It’s advisable to keep a record of your credit report.
- However, this can be done only once every 60 days.
In conclusion, checking you credit score can help you know various aspects of your financial health. It is necessary to monitor your credit score as it directly impacts your ability to obtain credit facilities. Keeping a track on your credit utilisation on factors that influence the credit score and working on it will help you improve your credit score. Thus, good credit score can open doors to better financial opportunities, while a poor credit score may lead to higher borrowing costs and limited access to credit.
About Red Fort Capital
Red Fort Capital is dedicated to empowering Indian MSMEs (Micro, Small, and Medium Enterprises) on their path to business growth through customized business loans. We understand that securing a business loan in India can pose significant challenges, particularly when factors like a less-than-ideal credit score, a relatively short business history, unclear financial records, or variable cash flow come into play.
As a respected Non-Banking Financial Company (NBFC), we take pride in offering a diverse range of secured business loans, spanning from 1 to 10 Crores. What sets us apart is our remarkable ability to disburse funds fast, in just 7 days. Our financial solutions are meticulously designed to cater to a spectrum of needs, including working capital requirements, equipment and machinery purchases, invoice/bill discounting, and last-mile financing, among others.