Your credit score is essential to your financial life. One crucial aspect about your creditworthiness that often remains shrouded in mystery is how frequently credit scores are updated. In this article, we will unravel this mystery and shed light on the factors influencing credit score updates.
Understanding the significance of credit scores
Before we plunge into the nitty-gritty, let's quickly recap the importance of credit scores. Your credit score is a numerical representation of your creditworthiness. In simple terms, it reflects your financial trustworthiness in the eyes of lenders and banks. When you apply for a loan, credit card, or any other credit facility, banks scrutinise your credit score to assess the risk of lending to you.
In India, the most widely used credit scoring model is the CIBIL Score, which typically ranges from 300 to 900. A higher score (750+) implies lower credit risk, making it easier to secure loans at competitive interest rates. On the other hand, a low credit score might result in loan rejections or higher interest rates.
Frequency of credit score updates
Credit bureaus like TransUnion CIBIL receive information from various lenders and financial institutions, which they use to generate your credit score. The frequency of updates varies among the credit bureaus, but generally, credit scores are updated on a monthly basis.
The lenders and financial institutions report your credit-related activities to the credit bureaus at regular intervals, usually monthly. This information includes your credit card usage, loan repayments, and any outstanding debts. The credit bureaus process this data to compute your updated credit score, keeping it current and relevant. Your CIBIL Score is updated every 30 to 45 days.
Factors influencing credit score updates
Several factors influence how often your credit score gets updated. Let's explore the key aspects that affect the frequency of credit score updates:
- Credit activity: The frequency of your credit-related activities, such as loan applications, credit card usage, and timely repayments, plays a crucial role in how often your credit score is updated. Regular activity results in frequent updates, helping you track your credit health effectively.
- Data reporting: The speed at which lenders report your credit-related information to the credit bureaus determines how quickly your credit score gets updated. Some lenders might report data more frequently than others, affecting the update frequency.
- Credit bureau policy: Each credit bureau has its policies and practices, which influence the frequency of credit score updates. While most bureaus update scores monthly, it's essential to stay informed about the specific policies of the bureau monitoring your credit.
Importance of monitoring your credit score
Knowing that credit scores update regularly, it becomes imperative for you to monitor them regularly too. Keeping a close eye on your credit score allows you to identify any discrepancies or inaccuracies that may negatively impact your creditworthiness. Regular monitoring empowers you to take corrective actions promptly and maintain a healthy credit profile.
If you’re looking to monitor your credit score and strengthen your credit health, you might want to explore the Bajaj Finserv Credit Pass. It empowers you with monthly CIBIL Score checks and real-time updates to your Credit Health Report, ensuring you are fully supported in your efforts to establish a robust credit profile. Sign up today for unlimited access to the Credit Pass advantage and keep a close watch on your credit score!
