What is your credit report?

cibil credit score

When a loan application is made to the leading financial institutions, banks, or investors, they utilize the Credit Information Report and CIBIL score to analyze the risk of an individual and make lending choices. The CIBIL score is dynamic and changes over time. A higher CIBIL score entitles you to better loan conditions, cheaper interest rates, longer repayment periods, new credit cards, and a variety of credit products such as car loans, home loans, insurance packages, and so on.

Credit report firms gather information about all borrowers from financial institutions and transform it into a report that details the borrower’s credit history. Personal information, accounts (owned by the entity), and inquiries done are all elements of a credit report (for obtaining credit).

Let’s look at what a CIBIL credit report is and how to read and comprehend it.

The six sections of the CIBIL credit report are: CIBIL score, personal information, contact information, employment information, account information, and enquiry information.

Each of the six divisions are described below. These sections of a CIBIL report serve a different purpose and are equally significant.

CIBIL Score 

Your credit behavior, as represented in the ‘Accounts’ and ‘Enquiries’ sections of your CIBIL report, is used to compute your three-digit CIBIL score. The CIBIL score ranges from 300 to 900, which is the highest score. The higher your CIBIL score is, the more likely you are to obtain any kind of debt. Higher CIBIL scores means that you have reliable credibility and the lender can trust you to repay your loan on time.

Personal Information

This part covers your personal information, such as your name, birth date, and gender, as provided to CIBIL by various members. The identification type part includes information from lenders such as your permanent account number (PAN), passport number, driver’s license number, and voter ID number. 

Contact Information 

This section includes your address and phone numbers. There are a total of four addresses that can be mentioned. The individual’s different types of addresses, such as permanent address, temporary address, office address and your email IDs are all mentioned in this section. This shows the genuine nature of the applicant. 

Employment Information: 

Employment information refers to all of a person’s previous occupations and employers. They look into their work history at those firms, as well as how frequently they have changed jobs. This aids the lender in determining the client’s income pattern. If the individual changes his job more frequently, it does not lead to a good impression in the eyes of the lender. It shows that you do not have a stable and consistent income lifestyle. 

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Account Information

Your account information reveals your ability to repay debts as well as your risk of defaulting. Lenders carefully examine it to evaluate essential factors such as your monthly debt-to-burden ratio, loan repayment history, account status, and so on.

Enquiry Information

The Enquiry Information section contains information regarding recent lender inquiries relating to credit applications. When you apply for a credit line, the lender will inquire about your credit history, which will be recorded. All the enquiries that you have made, from various lenders, either for a loan or best credit cards in India with their purposes will appear here. If you are the kind of person who repeatedly applies for a credit line, instead of being rejected by a lender, will also have a negative impression on the lender. This shows that you are credit hungry. 

The Bottom Line

Now that you have read about the information on your credit report, you can examine and justify the importance of each. You can also now read your credit report effectively without confusion. Always check CIBIL score regularly to be consistent about your scores. Also, check your credit reports often and report any errors, if you find so.