Credit Report Red Flags That You Must Keep an Eye on

05-Jul-2017 written by : FSI-Team

Your credit report is extremely important. Not only has it expressed about your financial health, but also a little something about your personality as well. Currently

Studies haves shown that those who have a clean/promising credit report are in general happier than those who don't. They are also found to enjoy a better quality of life. Thus, it's all the more reason to check your credit report every once in a while for the maintenance of good credit health.

While many people have started realizing the importance of creditworthiness and that how difficult it's to get loans without CIBIL rating, most of them still don’t know how to increase credit score and maintain a good report.

If you are unsure exactly how you can maintain a healthy credit, then you can start off by looking for the following red flags:

1. Days Past Due (DPD)

DPD refers to the no. of days that have passed since the date of due payment of a loan or credit card debt. Usually, these are indicated as any of the following: 30 / 60 / 90 / 180+ DPD.

Simply put, DPD means a late payment. While having a few mentions of these may not do much harm, when they are indicated more than that it can have serious repercussions on your report.

2. Settled Accounts

The mention of even one instance of settlement in your report can have disastrous results. This is because a settled account means that your lender had to settle for a lower repayment amount than the actual due amount because of you either defaulting on a loan or delaying the payments frequently.

A settled account makes it almost impossible to qualify a loan and forces you to get loan without cibil score, which have their own disadvantages. The reason is simple- a lender' can't risk the history to repeat itself and would rather steer clear from loan applicants with such red flags.

3. Minimum Payments

There are two reasons why you wouldn't want your free cibil report to contain a history of minimum credit card payments:

  • The lender will have a reason to believe that you are under financial stress which is why you are unable to make full payments of your credit card bills.
  • Minimum payments often result in a poor credit score. Most credit rating agencies take the minimum payments factor into their calculation systems, which is why you may observe a drop in your score.

4. Too Many Credit Report Enquiries

Your report has a separate section called "Enquiries". This refers to the inquiries made by banks and other financial institutions who want to see your credit report. Usually, they need to do this when you apply for a loan or a credit card. So, if there are multiple inquiries made during a short period it would suggest that you are "credit hungry" and can serve as a red flag.

A simple way to prevent multiple inquiries is to apply for your free credit report before submitting an application for a loan or a credit card. If you find that your credit score is low then you can work on it and wait until it's in better shape. Once this is taken care of, you can finally approach your bank. Since your credit score is better now, you are more likely to get your loan in the first attempt and thus there won't be multiple inquiries.

5. Discrepancies

Simple mistakes in your this report can have terrible results. Examples include- incorrect status of your loan accounts, your personal details, discrepancies in your payment history, etc. These mistakes can raise suspicions for a lender and can even hurt your credit score.

Fortunately, as long as you have identified the discrepancies, you can have them corrected easily. You can either contact your bank or the credit rating agency itself. They will rectify the mistakes and update your credit report accordingly.

If you think you can get personal loans without CIBIL check, then you are wrong. Financial institutions have become extremely prudent lately and only approve loans for those who have a good CIBIL score. So, be sure to improve your CIBIL score if you want a loan easily.



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