A credit score is an essential eligibility criterion that an individual must meet to be able to apply for a loan. Individuals can easily check CIBIL score online through financial institutions. However, there are other things on a credit report that an individual must check to protect themselves from identity theft. Any wrong information on the credit report can lead to rejection of loan applications, and other more severe consequences.
What Should an Individual Check on their Credit Report
Below are certain things that an individual must review carefully while going through their credit report:
- Name
Checking the spellings of an individual’s name is imperative as there are several instances when such errors occur unintentionally. A small mistake can cause a significant change in name, even referring to different individuals altogether. At the same time, there can be errors if there is a hacking attempt. So it is important to review the spellings carefully to detect chances of fraud or malicious access attempts.
- Address
Address is important information that an individual must check on the credit report. Since addresses include numbers and specifications, a small mistake can indicate a complete change in location. This results in a mismatch while applying for a loan leading to a rejection of a loan application. A wrong address can also indicate that the borrower’s private details may have been compromised.
- Unidentifiable discrepancies
There can be situations when some other person applies for credit in an individual’s name, and that is reflected in the credit report. If you find an inquiry in your credit report that you could not relate to, it becomes evident that you may have been a victim of identity theft and must report that immediately.
- Wrong judgements
If a third person raises credit against another individual’s name and does not pay it off, it is reflected on that individual’s credit report. Sometimes, vital personal details are inadvertently leaked to malicious people who can then falsify these data for their own benefits. As soon as that individual notices some wrong information like this, they must report it to the authorities to take necessary actions.
If CIBIL scores decrease due to any problem or discrepancy in the credit report, undertake several measures to improve or increase the same.
How to Improve CIBIL Score
Below are some ways in which borrowers can improve their CIBIL score to meet loan eligibility criteria:
- Evaluate credit report at regular intervals
Individuals must regularly evaluate their credit reports to identify the reasons behind their fluctuating CIBIL scores. This helps them rectify these mistakes at the earliest opportunity to stay consistent with their CIBIL score. This would ensure they can easily cross the CIBIL score cut-off while applying for loans from different financial institutions.
- Refrain from frequent loan applications
A frequent loan application can reduce CIBIL score to a considerable extent. This is so because it makes them look as if they do not plan their finances carefully and constantly need credit. So individuals must apply for loans only when they are in genuine need of funds.
Moreover, rejection of loan applications can also harm credit score if it happens frequently. Therefore, borrowers can check CIBIL score and eligibility criteria beforehand to avoid rejection of loans.
- Do not utilise entire credit limit
All individuals are eligible to get credit up to a certain limit with their credit cards based on several factors. Borrowers frequently utilising most of the credit limit can have a significant negative impact on their CIBIL score.
Hence, they should apply for a higher credit limit card. This would ensure the expenses stay well within the credit limit, thus avoiding any negative effect on their CIBIL score. Also, individuals must avoid applying for multiple credit lines to keep their CIBIL score consistent.
- Make timely repayments
Borrowers must service their loans and credit card dues within time. EMIs and credit card dues must be cleared within the payment due dates. This will increase the CIBIL score of borrowers which will help in getting future loan approvals.
- Maintain old credit cards
Maintaining older credit cards extends the credit repayment history. Timely repayments will ensure a lengthy history of repaying debts which will strengthen your credibility and improve the credit score.
Financial institutions check the CIBIL score of an individual stringently before loan approval. Therefore, any discrepancy will harm your future borrowing prospects. Checking your credit report will help you identify if you have been a victim of fraud, and take corrective steps accordingly.
