How To Read Your CIBIL Report

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Credit score is a 3-digit numeric summary of your repayment history. This is a score of your creditworthiness, indicating your propensity to repay the debt you have borrowed..Credit score form the major part of your ‘Credit information Report’ released by credit bureaus.

Major Bureaus in India

Credit Information Companies (CICs), commonly known as credit bureaus are financial institutions, licensed by the Reserve Bank of India, to collect data from various lending institutions. The  lending institutions send a monthly report related to their credit/loans disbursed, amount received, amount defaulted, etc. At present there are four CICs in India:

  • TransUnion CIBIL
  • Equifax
  • Experian
  • CRIF Highmark

The CICs collect and maintain the credit behaviour data of both individuals and commercial entities in India. This data forms the basis of the credit report and credit score of borrowers.

Each credit bureau has its own unique proprietary algorithm which it uses to calculate a borrower’s credit score. Payment History, Credit Utilization, Age of Credit, Mix of Credit,Credit Inquiries form the major factors that influence this calculation; however the exact weightage given to these factors by each of the credit bureaus is not known. Thus even the same individual’s credit score varies from one credit bureau.

Credit report issued by TransUnion CIBIL is widely used in India. The score ‘CIBIL score’ has become synonymous with ‘credit score’.

MAJOR SECTIONS OF A CIBIL REPORT

A CIBIL report contains detailed information on your credit history to date. All kinds of credit facilities availed; such as credit cards, personal loans, home loans, vehicle loans, overdraft facilities. The report is divided into 6 sections

  1. CIBIL SCORE – denotes your financial health score. It’s your creditworthiness score.
  2. Personal Information – Personal Details such as Name, PAN, Date of Birth
  3. Contact Information – Your contact information as registered with the lending institution
  4. Employment Information – Monthly/Annual income details as reported to the lenders at the time of loan application.
  5. Account Information – lists out details of all the credit facilities availed by you including names of lenders, type of credit facilities ( home, auto, personal loan, overdraft, credit card, etc), date of last payment, status (suit filed/wilful default/written-off/settled, etc). This section also shows the recorded payment history for last 36 months and days past due (if any).
  6. Enquiry Information – This section lists out the inquiries by lenders. When lenders receive credit application, they send out a enquiry for the applicants credit report alongwith the reason i.e. application details. Too many inquiries in a short span of time is perceived as lack of financial prudence and overdependence on debt.

 

Difference between Credit score, CIBIL score and CIBIL rank

Credit score – Credit score is a numeric summary of your credit history between 300 and 900 that is generated by any of the 4 credit bureaus operating in India.

CIBIL score – A credit score generated specifically by TransUnion CIBIL is known as a CIBIL score. It is a credit score generated for individuals.

CIBIL rank – CIBIL Rank is applicable to commercial borrowers i.e. companies. CIBIL Rank fedatures in the CIBIL Company Credit Report (CCR). CIBIL Rank lies  between 1 and 10 with 1 being best and 10 being worst.

3 Best Benefits of Having a Good Credit Score

  1. Higher chances of approval – Loan or credit card application approval chances are high for those with credit score ranging 600 and above
  2. Better negotiation power every time you apply for loan/credit card – Eligible for lower interest rates since high credit score is considered as low default risk. Low interest rates mean higher disposable income for investments.
  3. Pay lower premium: Insurance companies check the payment history of their customers and are likely to perceive a good credit score as a better scope of timely premium payments.

If you need further guidance on steps to improve your credit score, feel free to reach out to our Debt Counsellors, we help you get better at credit management.