Your credit score is a measure of your creditworthiness. If you have a good credit score of 740 to 799 it is considered very good. If you have a high credit score, you will get a loan easily and also at lower interest rates. You can check your credit score on your bank website, the websites of the credit bureaus or on fintech portals like BankBazaar.com.
Recently the Reserve Bank of India (RBI) has listed some rules regarding the credit score. One of them says that if a lending institution rejects you loan, you need to told the reason why your loan was rejected.
But do soft and hard credit checks affect your credit score?
“When you check your score for yourself, that is a soft check. And then there is a hard check, wherein you finish a loan application online, and a financial institution does a hard check,” says Adhil Shetty, CEO BankBazaar, a fintech portal.
How is your credit score affected in both these cases?
We have to bust this myth of inquiries having impact on scores. It used to in the past.
“A hard pull is something that happens when a credit institution makes an inquiry on the bureau when you make a credit application, whereas, a soft pull is consumer consent driven, information seeking behaviour where a consumer is involved in seeing their credit profile on the Bureau,” says Manish Jain, Country Managing Director, Experian India.
Whether it is a hard check or a soft check, your credit score is not impacted.
It Is Important To Check Your Credit Score Regularly
The consumer should sign up for subscription on credit bureau reports. “If you have subscribed, then you will get that information from the bureau saying your score has changed. That should instil a curiosity in the consumer to go and check the report why and why it has changed.” says Jain.
When you find that that credit line is still open of a bank that you had closed, you have two options. “You can either go to the credit bureau and say, I've already closed that. Then the credit bureau has an obligation to reach out to the credit institution on behalf of the consumer and the latter has to look at it and close in a fixed period of time Or you can go directly to the credit institution as well, saying, I have closed the loan. Why haven't you updated the reporting into the bureau?” says Jain.
Remember a credit score is an indication of your borrowing habits and financial health. Like you get regular health check-up’s, it is important to check your credit score regularly as well.
