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Is Your FREE Credit Report 'Actually' Free?

I presume that by now you are surely aware of Credit Report and Credit Score; which, till a few years back, was an alien concept.

In fact, I doubt if in recent times you would have paid your OWN money to buy a smartphone, TV, laptop, washing machine, refrigerator or some such product. Most likely it would have been on EMIs (i.e. Equated Monthly Instalments). In short, nowadays you are buying more and more things on loan.

And, this is where your Credit Report and Credit Score assumes importance.

If you are still clueless about credit reports / scores or have only a vague idea, you can refer to my earlier blog post All About Credit Score And Importance Of The Same for complete information and clarity.

Briefly,
a. Credit Report is a detailed analysis of your borrowing history (home loan, personal loan, vehicle loan, credit card, EMI financing, etc.) and
b. Credit Score is a simple 3-digit number — typically between 300 and 900 — that denotes your credit worthiness.

Most lenders assess whether you are a "safe" borrower or a "risky" one, based on your Credit Report and Score.

If you have a bad Credit Report and Score, you may not get finance from any lender. Your loan application is likely to be rejected. Therefore, if you want to borrow money, you need to have a healthy Credit Report and Credit Score.

A Credit Score of "750 and above" is generally considered as a good score by the lenders. In case you fall below this, here's How To Boost Your Credit Score To 750+ Levels.

By the way, a good credit history will not only make it easy for you to access loans, but also get them at cheaper interest rates.

Do you enjoy a good 'reputation' among lenders i.e. your credit history is healthy and you have a high credit score? For this you need to first get hold of a copy of your Credit Report. In the initial years, you had to pay money for the same. Thankfully, as per RBI directive, from Jan 2017 onward One Credit Report Per Year Is Absolutely FREE.

Simply write to any of the RBI-approved Credit Information Companies such as CIBIL, Equifax, Experien etc. and they will send you one Credit Report per financial year — free of cost (for additional reports, you will have to pay a small fee). The request can be raised even online on their website and you will get a soft copy of your Report.

IMPORTANT: This — and only this — is the best way to access your Credit Report completely free of cost AND RISK.

free-credit-report
Beware of the danger that may be lurking behind 'free' credit reports.

Nowadays you will get emails, phone calls, SMSs and Whatsup messages from many third-party companies offering you free credit reports. These are primarily finance companies. Their objective is to either use the Credit Report as a marketing tool to offer you loans and other financial services. Or, maybe 'paid' counselling if your report is bad.

WARNING: Do NOT fall for the 'free' Credit Report offered by such third-party agencies.

Reason No. 1: These companies do not possess your Credit Report. All they do is to obtain the same from the Credit Information Companies on your behalf. But, for that they need your key personal details such as Date of Birth, Mobile No., Email ID, PAN, Aadhaar, etc. and your consent.

It is a well know fact that Identity Theft Is An Extremely Serious Threat In Digital Age. Sharing your confidential and critical personal information with others is quite dangerous. It can be misused in many ways e.g. getting a fake SIM card in your name, hacking into your bank account, misusing your credit card and much more.

Given this risk of data theft, you SHOULD NOT let any third-party company access your Credit Report. Instead, as mentioned earlier, you can get one directly from the Credit Information Companies... with minimum fuss and effort. It is both free of cost and free of risk.

Reason No. 2: Once your credit history is known to these companies, you will start receiving spam calls and mails for loans and other financial services.

Firstly, such calls and emails are a big nuisance.

Secondly, your purpose to access your Credit Report may have been to just keep yourself informed. However, when bombarded with many alluring loan offers, you may succumb to the pressures. Consequently, you may end-up spending 'borrowed' money and thus compromise your savings. This, going forward, could cause serious damage to your personal finances and investments.

Remember, these third-party companies are not charity organisations. They are following up with you and luring you with attractive offers because they want to do business with you.

Hence, the so-called 'free' credit report obtained thru' such companies may 'initially' be free of cost, but in the long run it may cost you a fortune.

The ideal strategy would be to first directly get your Credit Report / Score and then approach these companies / lenders for your genuine loan requirements and other financial services.

There's only one advantage of going through the third-party companies to access your Credit Report. While you get ONLY ONE Free Report per year, these companies can get your report multiple times.

But, the fact of the matter is that, it takes time for the credit history to change. Whatever you do, your credit profile won't change overnight (except for some mistakes, if any, being rectified). So, getting frequent reports may not serve much purpose. Even one report per year should be good enough.
  
You are solely responsible to (a) take care of your financial interests and (b) protect your important personal data from misuse.

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