Does Checking Your Credit Score Affect Your Credit Rating?

In the current financial landscape, the importance of a strong credit history cannot be overstated. Whether you want to secure a personal loan or get a new credit card or obtain a home loan, having a good credit score is a must. This helps the lender determine your creditworthiness and maximises your chances of getting a timely approval. In addition to this, a high credit score also translates into more favourable borrowing terms and a lower rate of interest.

Table of Content

• An Overview
• Types of Credit Score Inquiries
• Does checking your CIBIL score affect your Credit score?
• Tips to Improve CIBIL Score
• Wrapping It Up

But two questions that almost everyone has are 'How do I know my CIBIL score?’ and 'How much CIBIL score will decrease for each inquiry?' To understand the impact of checking your CIBIL score, it is important to understand what this score is and what the different types of CIBIL score inquiries are.

An Overview

Credit score, commonly referred to as CIBIL score, is a three-digit number that represents your credit history. Lending institutions use this score to determine your creditworthiness and make decisions on your loan or credit card applications. This score is calculated using the information related to your previous loans and repayment patterns.

Types of Credit Score Inquiries

There are mainly two different types of credit score inquiries:

Soft Inquiries: Also known as individual inquiries, these credit score inquiries happen when you check your own credit score to understand your financial health. Apart from this, when your credit score is checked by a potential employer as part of background verification or by a lender to offer a pre-approved loan, it is again considered a soft inquiry. These credit checks do not have any negative impact on your credit score.

Hard Inquiries: Hard inquiries are also known as institutional inquiries. They occur when a credit check is performed after you have applied for a loan, credit card or any other credit product. Unlike soft inquiries, these inquiries can affect your credit score. Although the impact is usually small, multiple hard inquiries within a short period can lower your CIBIL creditworthiness.

Suggested Read: CIBIL Score vs. Credit Score - Are They the Same?

Does checking your CIBIL score affect your Credit score?

The short answer is no. If you are checking your credit score on your own, you don’t have to worry about its impact. This is a soft inquiry and does not affect your CIBIL score at all. In fact, regularly checking your credit score is a good financial habit.

Here are a few benefits of checking your CIBIL score on a regular basis:

• Easily Track Your Credit History: A credit score is the numerical representation of your creditworthiness. Regular credit score checks help you keep track of your credit history.
• Spot Inaccuracies on Time: Sometimes, your credit report may have a few mistakes, such as incorrect account balance, wrong account details, or inaccurate transaction details. By checking your credit report from time to time, you can spot these discrepancies and raise a dispute request.
• Get Faster Loan Approval: For individuals who are planning to obtain a loan soon, checking their credit score can prove to be very helpful. It allows you to take any necessary actions to improve the score and increase your chances of approval.
• Manage Your Finances Effectively: When you keep track of your credit score, you have a clear idea about how strong your financial profile is. This helps you make better financial decisions in the future.

Suggested Read: How is Credit Score Calculated, its Importance and How to Imporve It?

Tips to Improve CIBIL Score

Here are a few simple yet effective tips to boost your CIBIL score:

• Pay all your EMIs and credit card bills on time.
• Try to maintain a low credit utilisation ratio and avoid exhausting your credit limit.
• Apply for a new credit product only when necessary, as it helps avoid hard inquiries.

Wrapping It Up!

If you hesitate a lot before checking your credit score and make Google searches like ‘if I check my CIBIL score will it reduce?’, you are not alone. Many people think that checking their credit score too often will have a negative impact on their credit rating. But this is not true. In fact, keeping a track of your credit score helps you stay on top of your financial standing. So, it is important to check your credit reports at least once a year.

At Muthoot Finance, we give you the option to check your CIBIL score for free. If you notice any unexpected changes, you can raise a dispute and get it rectified. Apart from this, we offer a variety of other services as well. You can apply for a PAN card using our website. For any queries, visit the nearest Muthoot Finance branch.