Some simple tips can help you in better understanding of your CIBIL Report.
Most of us might know about what a CIBIL score is and what its importance is but do you know how to read your CIBIL report or how to interpret it? We might focus only on the CIBIL score and know about its importance but a CIBIL Report has much more information apart from the CIBIL score.
We shall discuss the report component wise to understand it better.
1. CIBIL Transuinion Score
This is the first section of the report. An individual’s score ranges from 300-900 and lenders use this score to decide whether to lend to that person on not. Obviously higher the score higher are the chances of lenders accepting your application as a higher score indicates lesser chance of default risk and vice versa. This score is calculated on the basis of factors like repayment history, credit utilisation ratio, credit enquiries etc.
This section also indicates the percentage of applicants that are sanctioned loans (in the last one year) based on the particular band that they fall into. Sometimes the score may not be a number between 300 and 900; do you what it can mean?
NA or NH means that you have no credit history or you are new to credit system or you have not had any credit activity in the last few years or you have no credit exposure. This is not a bad indication.
TIP: The information in this section indicates not only your CIBIL Score but also the likelihood of your application being accepted.
2. Personal / Contact/ Employment Information
This information is given under three separate heads. This is fairly simple; the personal information section contains information as provide by the lenders to CIBIL. Here the name, date of birth, PAN number, passport details, voter ID and driver license details are mentioned. Letter “e” mentioned against any detail indicates that the information has been provided by the lender.
Contact information lists up to four addresses (permanent/temporary/office), email ID and phone numbers of the person as provided by the lenders. Employment information section has details about your employment and income at the time of applying for credit. So in case of two different loans this can be different.
TIP: Here there is not much to understand except to make sure that the information mentioned is accurate.
3. Account Information
This is by far the most important part of your Credit Report. This contains information about all the open loans and credit cards that you have. Details about the lender, type of credit (home loan, auto loan, credit card etc), date when the account was opened, date of last payment, whether the account is held singly or jointly, amount of loan, amount of overdue (if any), total outstanding and a monthly payment record for last 36 months.
A red band against the information here indicates that the particular information is disputed. After a letter is received from the lender (clarifying about the situation) the information may or may not be removed depending on what the lender has to say.
TIP: This section gives a brief summary of your open debt; go through it carefully to find out about any lapses have occurred on your or the lender’s part. Try and resolve the dispute ASAP. This section is useful for you also too get an accurate picture of your debt situation.
4. Enquiries Information
Enquiry made by any financial institution into your credit score is listed under this head. Details such as name of financial institution, date, loan size and type of loan are mentioned here. This also impacts your final CIBIL Score.
TIP: Only hard enquiries (those made by financial institutions) are mentioned here; enquiries made by the individual for his own score (soft enquiry) are not mentioned here.
Some Important Terms
Below are few terms that can help you in understanding your credit report better.
DPD: Days past due is an indicator of by how many days the payment is late in that month. More than standard (STD) or zero “000” is viewed negatively.
CN: This is the control number mentioned at the top of the report and is useful if one wants to raise a dispute.
Settlement Amount: If a loan or a credit card payment is disputed. The borrower and the lender may agree at an amount that will be paid by the borrower; the rest is written off by the lender.
Written off Amount: When a loan amount is written off that means the lender has no hopes of recovering this amount from the borrower. Principal or total (principal plus interest) may be written off by the lender.
So next time you look at your CIBIL Report you will be able to read it and understand it like a pro!
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The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.