Easy Steps to Learn How to Check Your Credit Score for Free

Your credit score is a crucial 3-digit number that represents your creditworthiness to lenders. Depending on the instrument and the lender's policies, you may need a score well above 700 to qualify for funding. For instance, the minimum CIBIL score for a personal loan is around 720-750, depending on the lender.

Applicants that meet this mark get easy approval, and those with higher scores may even get special offers. To know if you are among those that qualify, you must know how to check your credit score.

Thankfully, the process is simple and you can complete it within minutes, completely online. Read on to know all about the credit score, and how you can check it for free.

What is a Credit Score?

A credit score is a 3-digit numerical representation of your creditworthiness. It is derived from analysing your previous borrowing and repayment pattern. These factors include your credit mix, credit utilisation, credit repayment history, and more.

Higher scores indicate a strong financial position and high creditworthiness, which can grant you easy access to credit. Typically, having a credit score of 750 or above is advantageous. Conversely, a lower credit score restricts your access to credit and may suggest that you need to work on enhancing your scores.

In India, the CIBIL score is among the most popular types of credit scores, and is assigned by TransUnion CIBIL. Other rating agencies are Equifax, CRIF and Experian.

How to Check Your Credit Score for Free?

Some credit rating companies allow you to check your credit score. In some cases, this service is free only once a year. This is the case with CIBIL, and to check your CIBIL score for free, you need to follow these simple steps.
Step 1: Go to the official TransUnion CIBIL website
Step 2: Navigate and click on 'Personal'
Step 3: Choose the 'Get Free CIBIL Score & Report' option.
Step 4: Fill in your personal details in the application form, including your name, email, birth date, and contact number.
Step 5: Click on "ACCEPT & CONTINUE" and verify your identity
Step 6: Access your dashboard and view your CIBIL score

In case you have already signed up earlier, you can log in to your TransUnion CIBIL account and get your CIBIL score.

Why is Checking Your Credit Score Important?

Checking your credit score regularly provides numerous benefits. Here are some of these benefits.

1. Helps Monitor Your Credit History
Regularly reviewing your credit score enables you to understand how your financial transactions impact your credit score. This allows you to take preventive measures to improve your score and avoid activities that may harm your score.

This becomes particularly vital when you are thinking about applying for new credit, as maintaining a high credit score is key. It helps get approval for credit at favourable terms and rates.

2. Protects Against Fraudulent Activities
Regularly checking your credit score helps you protect your finances against fraudulent actions, including unauthorised transactions linked to your accounts. It is essential to keep an eye out for suspicious transactions, unauthorised accounts and unfamiliar addresses.

Remember to report these activities as soon as you catch them since they can lead to financial loss along with a negative impact on your credit score.

3. Supports Identification and Rectification of Errors
Checking your credit score helps you catch errors or discrepancies in your credit reports that impact your score. Some common instances of errors include missing entries, incorrect amounts, and other cases when the reported transactions differ from actual transactions.

It is crucial to promptly report such errors to the respective authorities since these errors can have a negative impact on your credit score.

4. Aids in Determining Your Credit Eligibility
Credit scores play a crucial role in determining your credit eligibility since lenders use these scores as an assessment tool to evaluate the risk of lending. Typically, financial institutions set a particular credit score as eligibility criteria that you need to meet to be eligible for the credit.

For instance, with most lenders, the minimum CIBIL score for a personal loan that you need is 750 or above. Therefore, checking your score beforehand and then applying for the loan can protect you from rejections.

5. Helps Maintain Lower Credit Utilisation
Credit utilisation ratio refers to the portion of credit that you have utilised from the available credit limit. Maintaining a credit utilisation ratio below 35% is essential for a good credit score and to get easy access to credit.

Regularly monitoring your credit score empowers you to effectively manage your credit utilisation. This is because it helps evaluate when you need to take measures to lower your utilisation.

How to Improve Your Credit Score

Here are some of the ways that can help you improve your credit score.

• You must make timely repayments of loans and credit cards
• You must keep your credit utilisation ratio low
• You should clear your outstanding dues, including loans and utility bills
• You must restrict yourself from applying for new credit frequently
• You should try negotiating with creditors for manageable loan terms

Now that you know how to check credit score, be sure to check it regularly. Ideally, you should check your score at least twice a year, and review your report to ensure that there are no mistakes. Keep in mind that a favourable score helps you negotiate with lenders for lower interest rates. So, use this information to your advantage.