Do You Frequently Check Your CIBIL Score? Before seeing your credit report once again, read this
Your CIBIL score is the most frequent phrase you will hear when applying for a loan or credit card. Your loan eligibility and the interest rate you should be provided are determined by your CIBIL score. The likelihood of receiving a loan with a favorable interest rate increases with better CIBIL scores. You could wonder: “How significant is it?”
Being a low-risk borrower and consequently more likely to pay back your obligation on time is indicated by a good CIBIL score. However, a lower CIBIL score indicates a bad credit history, which makes you a higher-risk borrower. As a result, you will be given a higher interest rate in these circumstances.
A score of 700 or more is often regarded as excellent, while a score of less than 700 is considered subprime, meaning that the borrower is more likely to fail on a loan. The score is influenced by a variety of variables, including payment history, credit use, and the total amount of credit previously obtained. The most important of them is payment history since even one late payment will lower your CIBIL score. Additionally, excessive use of available credit lowers CIBIL ratings.
Notably, there are two types of CIBIL score enquiries: soft inquiries and hard questions. The categorization is determined by the objective of the CIBIL score check. When credit is reviewed for account review or loan preapproval reasons, it is referred to as a soft inquiry. A hard inquiry, on the other hand, is a credit check carried out to determine whether to approve a loan or provide credit.
Although a soft query often has no effect on your credit score, hard inquiries might be concerning if you check your score regularly. Hard inquiries only affect your credit score for the first 12 months but may linger on your record for up to two years.
Simply said, you should avoid monitoring your credit score regularly and only when necessary. It’s a good idea to review your credit report once a year, and even twice if necessary.
