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Simple ways to understand your credit report better

23-Feb-2019 written by : FSI-Team

Credit Report Better

Awareness about credit rating, the calculation process and its importance is still low in India, however now it is catching up. People are beginning to understand why it is important to be credit healthy and what can be done to improve one’s credit health. Thus it is very important that you look at your credit report from time to time and also understand it so that you are able to figure out what makes your credit score good or bad. Below we discuss simple ways that can help you in understanding your credit report better.

Understanding your credit report:

Now you can get a free CIBIL report or a report from any other credit bureau once a year without the need to pay anything. This means that now you can avail four reports in a year without any cost. This means that now being credit healthy just got easier. However what would you do with a credit report if you cannot understand what it means? Answers to the questions below will help you in getting a better understanding of your report:

  • What does the score mean? Credit scoring is done between the ranges of 300 to 900. You look at your report and see a score of 570 what does that mean? Is it good or is it bad? To put it simply: a score above 750 is excellent and it means you will have no problem whatsoever in getting a loan, a score between 650 and 749 is also fairly good, a score below 650 but above 549 means that things are not good and getting a loan approved could be a challenge, a score below 549 is definitely a cause of concern and requires immediate action.
  • What if my score is not between 300 and 900? Scoring is generally done between 300 and 900 but sometimes the score may be NA or NH and sometimes it may be 0 or -1. NA stand for “not applicable” which means the history is less than six months and hence rating cannot be done while NH means “ no history”. 0 again means “not applicable” and is given when history is less than six months and -1 indicates no history.
  • What do various terms in my credit report mean? Understanding various terms that are part of your credit report can also help you in comprehending your report better. A few terms are explained here:

  • STD means payment has been made within 90 day period.
  • NPA stand for Non Performing Asset and this means the payment has been overdue beyond 90 days
  • SUB is used for accounts that have been a NPA for over a year.
  • Doubtful stands for accounts that have been in the SUB status for more than one year.
  • DPD indicates the number of days a payment is delayed in a particular month. STD or “000” indicate normal status, rest is considered to be a negative status
  • What information does the accounts section have? There are various sections in the credit report; the accounts section is the most important one as it directly impacts the credit score. This section will have details about all your personal loans, home loans or whatever other loan you might have and also contain details about credit cards. This section has details like the dates when a loan started, total amount due, loan amount, open loans and closed loans and so on. Looking at this section can give you a comprehensive picture about your overall debt position. If you have repaid all dues for a loan but it still shows as an open loan then it means that NOC for it has been not taken. This section also contains details about your credit cards, sanctioned card limit, card usage and so on. Check this section thoroughly to get a better understanding of your debt position; this section also provides you information about your credit utilization ration which ideally should be 30% or less.
  • The above aspects can help you in getting a better understanding your credit report better. So focus on these simple aspects and be credit aware.

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