27-Apr-2019 written by : FSI-Team
So you have decided to be in control of your financial destiny. And since the credit profile matters a lot in your path to achieve the set goals on pecuniary front, you obtain your free credit report only to find out that it seems to be no better than a medical report. You are able to see a lot of data in various formats on the report but are not at all sure on what to understand from it. There is no need to sulk, if this has been the case with you. It may give you some respite, but as per a survey conducted by Credit Sudhaar, less than 5% of people actually are able to make some sense from their bureau reports.
This post is going to focus on giving you an understanding on how to read your report.
A good way to begin is to understand various parts of the report. There are four major parts. First, your personal data that includes your name, addresses, contact details and the details of your identification documents like PAN, Adhaar etc. The second part consists of your trade lines and includes all current and historic credit facilities every taken from any bank. The third part constitutes of all the inquiries. The inquiries are the loan or any other credit facility that you may have ever applied with any lending institution. The fourth part is the credit score itself. This is an outcome of all the debts ever taken by you.
This forms the top order on the report and you get to see it the first thing on your report. In India the score ranges from 300 to 900. A score of 750 or more is supposed to be good enough for you to have access to credit instruments. While this stands true for an unsecured product like personal loans, you may be able to get a secured loan even with a score of 720.
Please be advised that better the score, better the chances of you getting loan at better rates. So please check this out.
Also, a lower score may not be an outcome of past or current default, it could be low even on account of some error on your report or inactivity. So do not get disheartened if it is low. The following will give you the required information on how to spot errors.
This part will capture all information ever provided to any lending institution, even if the loan was not taken from them. Once you apply for a loan, the bank checks your historic performance on past debts and to do this has to share all the information furnished by you on the application form. Thus you may see all your addresses (in case you have shifted houses or cities), multiple contact numbers and email ids. All identification documents provided by you while applying for various credit facilities will reflect over here.
One thing that you must check is correctness of the identification document details. A wrong update here is quite possible and may lead to plummeting your scores.
This part will capture all details pertaining to your loans or credit cards. When was the loan taken, what kind of loan, time it was fully paid, current outstanding if the same is still running, rate of interest, bank name etc.
The repayment of last 36 months is also part of this section and is tabulated below the account details mentioned above. It gives exact information on your monthly payments. So if there was a delay of even one day in one of the months over last 36 months, it would be reflecting in this table.
This is the final part of the report and describes when all you would have initiated a request with any bank. While the details on trade lines only captures the disbursed accounts, this will hold date, product type, bank name and requested loan amount ever applied, including the ones that did not see an approval. In case you find some enquiries that have never been initiated by you, the same must be highlighted and corrected.
Now that you have basic idea on how to read the report, go ahead and do it to evaluate your credit profile.