How to Check Credit Score for Free?

If you are planning to apply for a loan then you must check your credit score first. Checking credit scores helps you in determining the chances of the loan grant provided to you.

The system works by reviewing and maintaining a historic financial record of your bank, credit card, past loans, etc., and analyzing your repayment capabilities.

cibil score meter

Ultimately, the bank must feel secure to provide you with the loan and must review the risk involved in recovering the funds.

All this can be done by using the credit score issued by Credit Information that maintains the financial track of an individual.

There are four Credit Information licensed by the Reserved Bank of India, which are as follows-

  • Equifax
  • Experian
  • Highmark

All the Bank in India uses one of the Credit Information Company or CIC to get the financial report about an individual and based on that report, the bank will decide to provide you with the loan or not.

You can check your credit score for free and decide whether to apply for a loan or not. Apart from the loan, the credit score is also used for credit card issuing.

Credit cards are also considered as loan equipment, a short-term loan agreement to be precise and, hence require a credit score.

The amount and type of credit card will depend on the credit score of an individual therefore, for the financial health of an individual maintaining a credit score is important.

There are a variety of ways for improving your credit score, but, the best way is to pay your loans and other debts in time.

In this article, we will discuss How to Check Credit Score for Free but first, let’s find out what is Credit Score.

What Is Credit Score?

A credit score is a number that indicates the risk that a lender has to take while giving a loan to a borrower. This score is based on the nature of your credit history and is scored in a three-digit number that ranges between 300 to 900.

The higher the number of scores, the higher the comfortability of banks in providing you with the loan. A general score of 750 and above is a good score for applying for a loan.

Why Credit Score is so important?

The financial system makes it mandatory for an individual to maintain a Credit Score to become eligible for a loan.

With the regular payment of the EMI, then your credit score will be improved and a score close to 900 will be provided to the individual, and sanction of the loan will be easy. But, if your repayment of the EMI is irregular, your credit score shall get down which could lead to the disapproval of your loan application.

How to Check for a Credit Score for Free?

The Reserve Bank of India or RBI released a notification in which the bank stated the allowance of one free credit score report to all individuals.

Usually, Credit Information Companies charge an amount for disclosure of your credit score but, with this notification, you can check your Credit Score.  

The following are the step by step instructions on how to apply for a Credit Score-

  • Visit the platform from which you want to check your credit score. You can choose from the platform- Equifax, CIBIL, Experian, or Highmark.
  • Now, you’ll find the button for checking for the Credit Score or you can click on the Registration button
  • After clicking on the button, you’ll be redirected to a form where you’ll have to enter your name, phone number, email ID, etc. followed by clicking on the ‘Get Credit Report’
  • Now, you’ll have to provide the details on the PAN Card followed by entering the address and other details demanded by the credit report agency
  • After providing all your details, your report of the Credit Score will be displayed on the website

How to Enhance Your Credit Score?

There are a variety of ways that you can use to improve your credit score, which is as follows-

  • To enhance the score, you’ll have to pay Credit bills, bills in time
  • You should not apply for a lot of credit cards and only apply for new cards when in need
  • The EMI payments should be on time and
  • Never use the credit limit of your cards more than 30% or less to keep the card better functioning
  • Never let your card/payment be rejected due to a low credit balance
  • Never close your old credit card, it creates a bad impression and negative impact on your credit score

How Much Score Do You Need for Various Types of Loans?

There are different types of loans that you can seek for a variety of reasons. The following are the scores that you would need to apply for the loan-

Credit Score Needed for Personal Loan

The minimum credit score for a personal loan would generally be 750. Any score above 750 makes the person creditworthy and the application process proceeds hassle-free.

Credit Score Needed for Housing Loan

For a housing loan, the minimum required credit score is considered around 620+. However, the lowest credit score for buying a house is could be 580.

Credit Score Needed for Investment in Car(s)

The average credit score required to buy a new car is 714 whereas the average credit score required for a used car is 655.

Please, note above figures does not guarantee of loan because there are many other factors used. But certainly, a good credit score increases the chance of getting your loan application approved.