Not so long ago, a credit score was used only by banks to look into your financial behaviour. It was used by banks to decide about your creditworthiness. Today, it is not just banks, but a host of other institutions which are making an opinion about you based on your credit score. Next time, therefore, not be surprised if you are asked about your credit report by a school while trying to get an admission for your child. A low credit score could spell trouble for your child given it poses a question on your financial credibility. Also Read - Got A Low Credit Score? Here's How You Can Still Avail A Loan
A credit score tells how credit-worthy one is. It is a three-digit number between 300 and 900 points. The score of 750 and above is considered good. The lowest score is between 300 and 400. Also Read - Five Things to Watch Out For While Evaluating Your Credit Report
Arun Ramamurthy, director, Credit Sudhaar, said, “It is important to maintain a good credit score these days. Traditionally, only banks were using it, but today various institutions ranging from schools to telecom companies have started using a credit report.” Also Read - Five Things to Consider Before Taking Out Personal Loan
Not only schools, companies, especially in the technology sector, have also started looking into your credit score. This is because companies tend to avoid financially burdened people as it can impact their productivity at work.
Your credit score is also checked when you apply for Visa. A look into your credit score can tell officials about your financial health.
Telecom companies also take a look into your credit score while giving you mobile connection. If the credit score is low the telecom company might give you a low credit limit or in the worst case scenario might deny you a connection.
Insurance companies use the credit score for e-KYC purpose. It is used for cross-checking the address and other details submitted with the bank.
Does it affect your credit score? Ramamurthy, said, “It is not used for premium determination by insurance companies. Right now it is used only for KYC purposes.”
Having said that, if your credit score is low, fix it right away.