Help and Advice

All You Need To Know About Your CIBIL Report and Score

CIBIL Report
Written by CreditSmart

What is Your CIBIL Report?

Consult a financial expert, and the first piece of advice he will give is ‘regularly check your CIBIL report’, and perhaps rightly so. No bank offers a loan or credit card without reviewing your credit report, so you may as well regularly look at it to know the kind of response you will generate if you were to submit a loan or credit card application.

However, confusion, not clarity, is what an average person experiences as he holds his credit report in hand. All it shows him is figures and dates; there is no readily-digestible insight about what to make up of the data listed or how to improve credit worthiness.

If you too feel lost when you take a look at your credit report, getting the following facts straight will help you read and understand your credit report better:

  • What kind of information is present in the credit report?
  • What learning can be deduced from the information present?
  • Why you should check your CIBIL report and how often you should check it?
  • What is not included in the credit report?

Information Present on Your CIBIL Report

Your CIBIL report has on it all the details related to your borrowing and repayment history. This is the direct information it gives. On the basis of data listed, certain pieces of information, however, can also be inferred.

A careful perusal of your report will give you a fair idea about your performance on important parameters that are taken into account by a financial institution while evaluating your loan or credit card application. Two such parameters are:

  • Credit Utilization Ratio

Defined as the percentage of your total credit limit that you are using, credit utilization ratio, ideally, should be in a range of 30% to 40%. A very low or zero credit utilization ratio also works to your disadvantage.

How to Calculate Your Utilization Ratio

Calculate your monthly credit usage by adding the outstanding credit due on each credit card. Next, add the credit limit on each credit card to get your total credit limit. Finally divide the total outstanding credit by total credit limit and multiply the resulting figure by hundred to get your credit utilization ratio of that month.

  • Late Payments

Each late payment negatively affects your credit score. The more of them you have, the poorer your credit score and the lower your credit worthiness will be.

Why Check Your CIBIL Report?

You should check your CIBIL credit report once every six months for two reasons mainly:

  • To get an Idea About Your Performance

As said above, a careful study can reveal how you are performing on important factors considered by banks when they evaluate your application for a loan or credit card

  • To ensure There are no Errors in it

Inaccurate entries can hurt your score and limit the financial opportunities available. Check your report carefully to ensure each entry in it is accurate. If you come across a redundant or incorrect entry, contact the relevant financial institution immediately. Don’t forget to include the documents that back up your claim in your correspondence.

Information not Included Your CIBIL Credit Report

You won’t find the following information in your credit report:

  • Your Credit Score

While often CIBIL credit report and CIBIL credit score are used interchangeably, the two are not the same.

Your CIBIL credit report contains details about your loans and their repayments. The CIBIL score, on the other hand, is a three figure representation of your credit worthiness calculated on the basis of the information present in the CIBIL report.

The CIBIL credit score ranges from 300 to 900. The closer your score is to 900, the better is your capacity to take a loan at a favorable rate. You can purchase your CIBIL report and CIBIL score for Rs 154 and Rs 470, respectively.

  • Unexplained inquires

You may find a number of unexplained inquiries in your CIBIL credit report. These may be companies or individuals who wanted to review your report to see if they can extend a job offer. You shouldn’t worry about these inquiries, as they have no impact whatsoever on your credit rating.

  • Interest Rates You will Qualify for 

Your credit report doesn’t tell whether you are eligible for a certain loan or not, and if you are, what terms will be offered to you.

Now that you know what information your credit report contains and what not and how to deduce important learning from it, use this knowledge to fulfill your plans.

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