As per the new RBI rule, all the credit bureaus of India including CIBIL, Highmark, Experian, etc. have to provide one free credit report per individual per year. Although the credit users are free to get additional credit reports afterwards, they will have to pay the applicable charges set by the credit bureaus.
Now, what does a free CIBIL report or any other credit report mean to an individual? If anything, it’s one of the biggest advantages they can get in the area of credit management.
If you have never checked your own CIBIL report in the past, then it is the best time for that because now you can get one annually for free. It could help you become credit smart in several ways, which are:
- Identity Theft Protection
Identity theft is a silent epidemic that is ruining the lives of hundreds and thousands of people in the country every day. In fact, it has become so easy to secure personal and credit information of the people in the country that crooks are actually selling the records by thousands at 10 to 20 paisa each.
One of the biggest challenges with identity theft is that it’s difficult to detect. Usually, victims only find out about if after the damage is done. However, the financial disaster can be easily averted by simply checking the credit report every once in a while.
So, if there is any anomaly in the report such as unfamiliar transactions or credit card bills then it could be a sign of identity theft and must be reported immediately.
- Credit Management
To build a healthy credit score it’s important that you keep your credit usage under control. However, when you have multiple credit cards, it is difficult to keep a track of them all. This is where a free credit report can be helpful. It contains all the information regarding your loan payments, pending debt, credit card bills, etc. and is provided in an organised manner. You can easily scan the vital information and adjust your expenses accordingly so that your credit score doesn’t take damage and your debt doesn’t increase excessively.
- Easy Loans
Although banks get benefit in sanctioning loans, they don’t give them so easily. The reason is that there are risks when they lend money to someone. In fact, getting a loan can be quite challenging. So, if you have a poor CIBIL score and have applied for an HDFC home loan, SBI home loan, and DHFL home loan, all at the same time, then you may not get a nod from any bank. This is because multiple requests can lead to further damage to an already poor score.
Instead of applying for a loan you should check your free CIBIL report first. If your score is good then you are good to go, but if it’s not then you must first improve it. This way you can easily get the loan of your choice.
- Errors and Discrepancies Handling
Do you know that the people who pay their bills on time and use their credit cards responsibly can also have a poor credit score? Discrepancies and mistakes in the credit reports can result in a poor score despite good credit behaviour. Thus, although such people may have high creditworthiness, the credit bureau is led to believe otherwise because of the wrong information provided by their banks. So, if your application for HDFC car loan has been rejected even though you have a reason to believe you have a good credit history you can check your free credit report. If there are any mistakes in it then you can report them to your bank and they can get them corrected. This can improve your score to a huge extent.
Smart credit users know the importance of credit reports. Now that the RBI has given the facility of one free credit report every year for every individual, you have all the more reason to check yours now if you haven’t already!