Any time an individual applies for a personal, motor, or home loan with a bank, NBFC, or other lending institutions, their credit report is created by the latter to determine their creditworthiness and eligibility for the loan. Financial advisors always recommend that it is ideal to request a credit report of yourself from time to time, check CIBIL score routinely, and ensure that you are an ideal loan candidate even if you need to apply for one anytime in the future.
Here are some of the reasons why it is so vital to check your credit report regularly:
1. Correction of errors
Errors in the credit report are usually common grounds for a loan application to be rejected. If at all there are any errors in your credit report, like a misspelled name, error in registered address or mobile, or an invalid payment entry of any type, you can find it out in advance. It is then possible to raise a request for correction or contact their customer complaint department to have it changed.
2. Improving credit score
Most lending institutions check CIBIL scores, credit reports, and other such parameters of loan applicants. Before applying for a loan, you too can simply go online and request your Experian credit report, for example, and credit scores in advance. This will help you understand how loan-ready your profile is and what more can be done to improve that score.
3. Avoiding identity theft
There have been reports of many identity theft crises all over the globe where an individual’s personal information is stolen to apply for a loan or borrow credit in their name. If you check your CIBIL score from time to time and request frequent credit reports, it will be easy to look for such suspicious entries in the report and get them corrected or file a complaint.
4. Checking for any missed payment records
Every individual incurs different kinds of expenses monthly, including loan EMIs, credit card bills, personal loan credit, line of credit, etc. Usually, EMIs and credit card bill payments notify the borrower of their dues well in advance, helping them make timely payments. However, there might be a time when you miss out on a payment or two, or you may not have sufficient funds to do so. Such missed payments also reflect on your report, like your Experian credit report, for example, and can eventually affect your credit scores.
A timely assessment of your credit report will help you determine how much effect it had on your credit profile, and you can also check your CIBIL score to get more clarity.
In conclusion:
A credit report is the summary of your repayment history that helps banks and lending institutions determine your creditworthiness during loan processes. Pay attention to your credit report from time to time, check your CIBIL score, and work towards improving your overall credit score. A higher score and good credit report will always keep you in the good books of all lenders.
