A Helpful Guide to Understanding Your Credit Report_Banner_WC

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A Helpful Guide to Understanding Your Credit Report_WC

5 min 27 Jan 2023
what is credit report
Highlights:
  • What is a Credit Report?
  • Credit Score Range
  • How to Read a Credit Report?

Your credit report or CIBIL report showcases your monetary health providing a deeper insight into the state of your overall finances. It forms an integral part of your credit score and helps lending institutions make critical financial decisions such as whom to grant credit and on what terms and conditions. Once you understand what constitutes a credit report, reading its contents becomes much simpler. 

What is a Credit Report?

A credit report is a detailed record of your credit history pertaining to loans and credit cards that you own, and how responsibly you pay the respective EMIs and bills. Individuals can access their credit report from any of the four credit bureaus in India – TransUnion CIBIL, CRIF Highmark, Equifax and Experian. Each credit agency compiles credit information from various lending institutions in the form of a credit report. Thereafter, they assign a three-digit numeral, popularly known as a credit score or CIBIL score.

Credit Score Range

Here is a quick look at the different ranges of credit scores and what each of them implies while availing credit:

Your CIBIL Score  

What it implies  

800 - 900  

An excellent score range that Indicates that you have never defaulted on your EMI and credit bills payment.  

750 - 800  

A very good CIBIL score. You can now negotiate and bargain on your interest rate.  

625 – 750  

You have a decent credit history with very few irregularities. You may get a loan but at a higher interest rate.  

300 – 625  

This score indicates high frequencies of defaults and irregularities. You may find it very difficult to get a loan unless you improve your CIBIL score.  

 

Also Read: 7 Tips to Help You Improve Your CIBIL Score

How to Read a Credit Report?

A credit report comprises various sections with different categories of information. Each credit bureau has its own format but the general compilation of the sections is as follows:

1. Credit Score

A credit score is a numerical representation of your credit history ranging between 300 and 900. Lenders evaluate it before approving any credit to determine your eligibility and the appropriate terms.

2. Personal and Account Information

This section contains your personal and account information. It mentions details like types of loans, account numbers, ownership details, important dates, loan amount and month-by-month data of your loan accounts up to the last three years. It also references your credit balance, available limit, account type, account status and payment history.

3. DPD Information

DPD or ‘Days Past Dues’ is a record of your credit payment timelines. Even a delay of one day is reflected here either as a remark or a number. For example, if there is a delay of four days, it will be marked numerically. If you default by 0 days, it may be indicated with a numeral or a comment. ‘XXX’ means unreported information. A DPD other than ‘000’ or ‘XXX’ implies that one has not paid their dues regularly.

4. Enquiry Information

Enquiry information encompasses both hard and soft enquiries. A soft enquiry is the one made by you, businesses offering you goods or services and your existing creditor. It doesn’t affect your credit score unlike a hard enquiry, which is usually initiated by prospective lenders after they receive credit applications. A single hard enquiry may be harmless, but too many credit requests can reduce your score.

5. Credit Report Remarks

The remarks section shows the current state of your accounts. Given below are some lender’s comments that one may commonly find in a credit report:

  • Settled

    Partly paying the dues to settle a loan or credit card may attract a ‘settled’ remark. This has negative connotations for your credit score and future credit aspirations.

  • Written Off

    Inability to pay off the outstanding loan/credit card amount for more than 180 days is reported as a ‘written off’ note hurting your credit score.

  • Post Write Off Settled

    A ‘post write off settled’ comment denotes debt settlement after your credit has been written off. This can seriously damage your credit health, denying you any credit in the future.

  • Wilful Default

    A wilful default happens when borrowers do not repay the loan despite having the means to do so. Those who utilise loan funds for unfair purposes other than the reason for which they were originally availed are also brought under the purview of wilful default. Such borrowers are seriously dealt with, sometimes necessitating legal action.

  • Closed

    When you pay off your loan in full, lenders report the account as ‘closed’. They also issue a ‘No Dues Certificate’ or closure letter stating the loan cleared.

It is imperative to read and fathom one’s credit reports for easier monitoring of the records and to maintain a healthy CIBIL score or even improve it, if necessary. Tracking your report periodically enables you to check its accuracy. In case of any discrepancies or mistakes, report them to the credit bureau immediately. They will consult the financial institution in question before effecting the necessary changes. Your credit records let you make more informed decisions regarding your spending habits and credit behaviour as a diligent borrower. 

Blog-Intro-Disclaimer

DISCLAIMER:

While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.

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