Getting to Grips with the CIBIL Credit Report
Whether one likes it or, your CIBIL score and Credit Report has become an inseparable part of your financial and credit life. The issue staring before you is how to comprehend the smaller details along with the bigger complex ones and understand why exactly your Credit Score is low and why the interest rate applied in your loan application is higher than the market rate.
The point here is you need to understand the implications of the CIBIL Credit Report in order to know exactly why your home loan application was almost declined. And when it did come through eventually, it did so with so many riders. And the interest rate was intimidating too.
The answer, or rather the solution to all these vexing concerns undoubtedly lies in your being able to read and understand the CIBIL [Credit Information Bureau (India) Ltd.] Credit Reports. Here, the operating term or activity is reading and understanding.
Though it is very much true that the Credit Report is full of financial jargon, it still is not beyond an average person’s grasping ability. It does require a systematic as well as diligent approach to realize what is on your report and how you can go about rectifying its shortcomings and enhance your credit worthiness the next time around.
The credit report is only a reflection of your account information
Here is how you can not only go about understanding the implications of your CIBIL score and credit report but also the more vital points involved in the credit rating –
- The first step is to acquire the credit score as well as the CIBIL credit report. You can do this pretty easily by filling an online form that is there for this very purpose on the official web site of CIBIL. This entails a nominal payment of Rs 470 only. CIBIL evaluates your credit score on the basis of four parameters – your payment history; how wisely you have used your credit cards (prudence demands that you avoid a higher credit balance as it reveals a greater repayment pressure for you); the percentage of credit cards as well as personal loans (unsecured loans) the higher the percentage the lower will be your credit score; and, the number of loans you have applied for recently
- After your details have reached them, CIBIL will evaluate the same to establish your authenticity beyond any iota of doubt. Once your authentification is done, you will be provided a pass word and receive an E-mail the same day providing your Credit Score and other details. For further details, do please log on to www.cibil.com.
- Make the exercise an annual ritual. Study and scrutinize each and every line of the Credit Report. You will have to do this every financial year. You do the reading part in the same manner as you would file your income tax returns; plan your major loans and other financial needs; and, your annual health check up. While going through the credit report document, ensure that you have your updated bank, credit card and other essential details so that you can match the facts for yourself.
- The vital exercise entailed here is to watch out for errors and omissions that might have crept in at the lender’s end. A simple enough omission of a repayment along with interest that you have made say a fortnight ago is bound to reflect negatively on your CIBIL Credit Report. In such instances, all you need to do is report the same to your bank as also CIBIL. They will promptly do the needful and update your report. This automatically will have a positive impact on your credit report.
- You need to keep a hawk eye over any identity thefts online that may have happened. Sometime, it does happen that you are a little surprised to find a particular credit card purchase that you don’t remember making at all. But tend to treat it casually. Here, you are treading on even more dangerous terrain than the outcome of the CIBIL credit report on your credit worthiness. Someone somewhere has obviously got some access to your accounts. Report this immediately to the banks, CIBIL, etc. who, in turn, will do the needful.
The danger signs to look out for here include – credit inquiries not made by you; loan requests not made by you; small and seemingly insignificant purchases using credit cards, or online payment mechanism that you have not made; presence of addresses, pass words, and phone numbers that are not used by you, etc. Your CIBIL score can swing 10 or more points with just one instance of error.
- Make a sincere effort to have an ongoing communication with your bank and understand what all entails when it comes to good credit behavior, and your CIBIL score will benefit.