Credit reports are basically a breakdown of a borrower’s credit repayment history that displays their credit reputation.
The reports are prepared by credit monitoring agencies that accumulate all financial information about their respective borrowers. This data is based on the information forwarded by financial institutions and lenders such as banks, Non-banking Financial Companies (NBFC), and insurance companies across the country.
The credit score report includes both – positive and negative – information. While positive information entails responsible financial management, timely payments, scores, and so on, negative information such as bankruptcies, foreclosures, and collection accounts reflect the irresponsible behaviour of the borrower.
However, borrowers who just bank on the free credit score reports that have been made mandatory by the Reserve Bank of India (RBI) every financial year, or believe in availing those free credit score reports by logging on to the credit monitoring websites, then there is a catch in it. Such borrowers just get the report which has insufficient details in it.
On the other hand, those who wish to stay on top of things and do not wish to compromise on their financial future prefer a detailed copy that can be availed only by availing the paid credit score services.
But before we move on to the benefits that paid services offer, let’s check out a few other basic aspects of credit scores.
What are credit scores?
These are three-digit numerical that range between the 300 and 900 mark. These can be divided into 3 prominent categories – 300 to 549, 550 to 750 and 750 to 900 mark. While the first slot denotes poor scores, the second category signifies that the borrower can improve the scores with little efforts and the last batch of numbers speaks highly about the borrower’s responsible financial behaviour.
Simply put, those closer to the 300 mark need to really buck-up on their financial habits while those closer to 900 have the power to negotiate the terms and conditions such as interest rates and tenure of loans.
Importance of credit scores for borrowers/ lenders
From the consumer’s point of view, monitoring the credit score can help prevent a lot of financial mishaps such as identity thefts, misreporting, and so on. Not only this, but good credit scores can also help borrowers get a good job, rent a good apartment, and so on.
On the other hand, the lenders use this report along with other details to determine a loan applicants’ creditworthiness. It is an assurance that the borrower is a right bet and will repay the loan without much of a hassle.
How to select paid credit score monitoring services
This is an important task and before the customers choose which monitoring service to have a tie-up, they must take into consideration their service limitations. For example, while one service company may have a mobile app for its customers, the other may have reduced service rates.
Why opting for paid credit score report is better?
Security features: The paid credit score features are much safer compared to the free services that bureaus and third-party companies offer. That is because when the customers pay for the credit reports they automatically get covered or insured and reimburses for identity theft expense, and gets an immediate access to a fraud resolution specialist, in case of identity compromise.
Displays serious financial attitude of customers: Credit reports impact mortgage rates, credit card approvals, and even small things like cell phone purchases. Hence, persons who take their finances seriously would not be satisfied with an insufficient or a mere outline of their financial report. This reflects how responsible the customers are regarding their finances.
Aids financial analysis: Detailed versions of credit score reports helps customers analyse factors that are pulling the scores. On proper scanning of such reports, the customers are able to identify habits such as overspending, incorrect information, missing out on payments, or even errors in the report. This habit saves them from a lot of problems that customers periodically avail free credit reports or don’t avail the reports at all.
Raises prospect of jobs-seekers, tenants: These days, prospective landlords and employers prefer candidates with a copy of the latest credit reports. This is because they want to be sure of the persons they are going to hand over their apartments/property or share vital official information such as confidential documents, cash, cheques, and accounts, and so on with them. Hence, when prospective consumers or job-seeker provide them with the paid credit score report, the hiring parties are very impressed and the trust factor is generated between them. This raises the chances of the candidate of getting the apartment or the job.
Get financial advice: Customers who avail the paid credit score report services have an additional benefit of receiving personalised tips on boosting credit scores from their respective bureaus. This is a great advantage that paid customers have over those believing in free-bites.
The bottom line
So, there are several substantial reasons why people prefer opting for paid credit score reports. No wonder, they enjoy a lot of privileges and lead financially secured lives.