Established in 2000, CIBIL is an entity liable for maintaining credit information. The full form of CIBIL is the Credit Information Bureau (India) Limited.
Generally, such Credit Information Companies (CICs) are third-party, independent organizations that accumulate credit card and loan data.
And then, they share this data with associated financial institutions and banks. Individuals can obtain their CIBIL report with credit score, history, and more information.
However, for a layperson, decoding this report can become quite taxing. If you are also feeling the heat, find the easy way to read a CIBIL score report and familiarize yourself with your credit situation in this post.
What is a CIBIL report?
Once CIBIL has accumulated the financial data of individuals and companies, it creates a Credit Information Report (CIR), also known as a CIBIL report. This report comprises vital information that financial institutions can view if that concerned individual has applied for a credit card or a loan.
This information discusses previous loans, such as home, car and personal loans. Along with that, it also has information regarding your overdraft facilities and credit cards.
One detailed section is dedicated to your repayment history and how quick you have been with your EMIs. Ultimately, this report helps the lender comprehend whether you can return the loan or repay the bills on your credit cards.
But how to get CIBIL report? You can go to the CIBIL website and click on the ‘know your score’ option. Fill out an online form with information like your name, date of birth, income, identity verification, address, phone number, and the loans you have taken out.
In addition to individual CIBIL reports, financial institutions also get CIBIL Commercial Report to make better lending decisions when they get loan requests from public limited corporations, private limited companies, partnership firms, and sole proprietorships.
What is the CIBIL score?
Your CIBIL score is a three-digit numeric summary of your credit history calculated using information from your CIBIL report’s ‘Accounts’ and ‘Enquiries’ sections, which includes your loan accounts or credit cards, payment status, and outstanding amounts’ that are past the due date. The score indicates your credit worthiness, as determined by lenders, based on your borrowing and payback history. The CIBIL score ranges from 300 to 900, and the higher your score, the more likely you will be approved for a loan.
How is the CIBIL report calculated?
Four significant factors influence your CIBIL score:
Payment history: Your CIBIL score depends on your payment history of loan EMIs and credit card dues. If you pay your payments on time without missing a payment, it will positively impact your score.
Credit mix: A well-balanced mix of secured and unsecured loans is likely beneficial.
Multiple loan queries: Having too many loan inquiries will lower your score because it shows that you might depend more on credit.
Credit utilization ratio: The credit utilization ratio is the proportion of the credit amount you have used out of the total available credit. A low credit utilization ratio has a positive impact on your credit score.
How to read a CIBIL report?
In a CIBIL report, you will find 7 primary sections. While they have varying roles, each of these sections is equally vital. The objective of these sections is to offer genuine and complete information. Find out more about these sections in the following points:
- CIBIL Score
Your CIBIL score, based on ‘Accounts’ and ‘Enquiries’ in your CIR, ranges from 300 to 900.
- Personal Information
CIBIL collects personal information to help NBFCs and banks in verifying your data. This section contains:
- PAN card details
- Name
- Date of birth
- Voter’s ID
- Other identification proofs
It collects this information through a variety of methods. If there is any data that has been collected from previous lenders, it will be marked with an ‘e’ to ensure accuracy.
- Contact Information
As the name suggests, this column contains all of your contact information. This is additional proof of genuineness. This section offers a variety of contact information and addresses, such as:
- Addresses (permanent, temporary, work, and home)
- Email IDs
- Contact numbers (home and mobile)
This information is taken from previous and current lenders to ensure accuracy.
- Employment Information
In this section, you will find data related to the companies and your jobs. They check your records at the companies and how frequently you switched from one organization to the other.
This way, the lender gets to comprehend your income patterns. Anybody who frequently switches jobs has fewer chances of getting a loan disbursed because of consistent income changes and unstable earnings.
- Account Information
This is the most vital section of a credit report. Account Information connects the financial institutes and banks to your financial status. You will find records of your ongoing and previous credit card statements and loans here.
It also contains information regarding how frequently you make your repayments or if you have missed any payments. The account information also has your bank account details.
It also mentions your account type, be it savings or current, single or joint. With this data, they can comprehend your behavior and determine your creditworthiness.
- Red Box
Sometimes, you can see a red box above the ‘account details’ table. If any disputes are linked to the account information, the red box will come up with the text citing the fields under the question.
They will remove the box after the dispute is resolved. There could be or could not be any change in your information based on the lender’s input on the disagreement.
- Inquiry Information
This is one such section that has details of all the banks that are thinking of lending you credit cards or loans. Such inquiries are made by varying NBFCs and banks that have kept your credit score in mind.
Thus, to be a worthy candidate for getting a loan, make sure your credit score is good enough.
Conclusion
A good credit score is a score that is above 700. If your score is lower than this benchmark, availing of loans or credit cards could be a hassle. So, make sure you do everything possible to improve your score.
Leave a Reply