The significance of credit score is well known today. We all know how important it is to maintain a good credit score to enjoy the power of credit and build assets in life. However, many a times, what we assume as our best of the efforts are not even good enough. Likewise, we realize our financial mistakes only after the damage is flagged off in the credit report.
Once distorted it is not easy to pull back the score to its original position. It takes at least 45 to 60 days to dispute the errors on your credit report. The bureau would mend the changes only after checking the information from the finance company involved and the entire process may take up to two months. Thus it is important to be vigilant of the information being reported on your credit report.
You should at least pull out three credit reports every year and ensure a healthy credit score. Every year CIBIL offers one free CIBIL report and you should access it to know your credit score.
It is wise to know about the credit score in advance before applying for a loan. This saves you from the last minute surprises such as rejection of loan due to low CIBIL score.
Let’s find out 4 unexpected items that can end up on your credit reports, without you knowing.
1. Unpaid bills
Repaying your debts on time is one of the most factors that boost the credit score. All of us ensure that we pay loan repayments and credit card balances on time, every month. For, other bills such as home rent and utility bills are generally perceived as the ones that are not reported to credit bureaus. Delay in these payments is assumed to not make a bad mark on the credit report.
However, think of the times, when an overdue is reported by the company to the bureau. It would greatly hurt the credit score. So you should pay attention to other bills too such as hospital bills, insurance premium and more. For, the timely payment might not boost the score; the delayed payment can certainly hurt your credit worth.
2. Closing Old Credit Card
While it is widely known that high balance on credit cards hurts your score and one should limit the monthly use of plastic cards, very few people recognize the fact that applying for or closing a card can also make a big mark on your report. Closing your high cost credit cards is although a prudent step in favor of your credit score, closing a very old card with positive history however could hurt your score. You should thus ensure that you do not close the card with a good history. It takes a couple of years to build a good history and by closing the account you would not be able to use benefits of your previous history.
3. Loan Settlement
Your every financial move is marked on your CIBIL report. Any unclosed account in the report is marked red and breaks down the chances of future credit. When you choose to settle a loan and do not close it officially, there are high chances that the lender may skip reporting to the credit bureau. If such is the case, the credit score will face a big blow. Till the time a loan account is not closed and is being left untouched in between, your loan application would not be entertained by the lenders.
4. Unknown Errors on Report
Not checking your report can greatly hurt your score as you would not be aware of the credit issues on time. When you miss to dispute errors on your credit report, it becomes difficult to further the bad credit fix.
The longer the errors would stay on the report the more harm would they cause to the score. In fact not assessing credit report can also entail to a major identity theft. You would only come across the fraud after the score touches a low or any of your applications is rejected.
All in all, you need to stay vigilant and actively check your CIBIL report to ensure that there is no unknown activity on your credit report.