08-Feb-2016 written by : FSI-Team
Called for a copy of your CIBIL report and do not know how to decode it? If the information in your report looks like Greek and Latin to you, fear not. Let’s understand in depth what the CIBIL report is all about.
Firstly, let’s see why the CIBIL report becomes so critical with regards to your financial health. This is because the report contains detailed information regarding your credit history, and is used extensively by lenders when determining whether to approve or decline a loan or credit card application. It helps a lender to gauge your creditworthiness, and what is the possibility of a loan going ‘bad’ or there being a payment default.
An important component of the report is the credit score, a three-digit numeric representation ranging between 300 and 900 that is nothing but the crux of your credit report. Higher the score, the more creditworthy you are. With CIBIL for instance, a score of 750+ is considered to be good. It is this that lenders first see, and then proceed to review your application. Do keep in mind though that the credit score is not the only parameter taken into consideration, but other information including your income and other financial commitments is factored into the decision.
A CIR is divided into 6 sections:
The first thing to do would be to check your payment history, and ensure that it is both accurate and up to date. The ‘DPD’ mentioned in the report indicated how many ‘days past due’ the payment on a particular account is, and anything apart from ‘000’ or ‘STD’ is not looked upon favourably by a prospective lender.
|DPD||What it stands for||What it means|
|STD||Standard||Payments are being made within 90 days|
This pertains to a special account being creating for
an account that is moving towards being sub-
|SUB||Sub-standard||Payment are being made after 90 days|
This implies that the account has been a sub-
standard account for a period of 12 months
An account wherein loss (i.e. non-payment of dues)
has been identified, but it remains uncollectable.
This means that account information has not been
reported to the credit bureau by the concerned
To cite an example using the above information, if there is a number in the DPD column, it means that the payment has been delayed by those many days. Hence, ‘070’ means that the payment is late by 70 days. Of course, it goes without saying that the ideal scenario is one wherein your report mentions ‘000’ under DPD, which means that there has been no payment delay.
Another crucial aspect to check is the status of your account. Remember, accounts that have been written off or settled, or cases where suits have been filed are not considered to be favourable. When you do not make an outstanding payment for more than 180 days, the bank or financial institution in question is required to ‘write off’ the amount. This then gets captured in your credit report, and will lower your score drastically.
Further, do also check the dates mentioned, i.e. the last payment date and the last reported date on your account. Let us assume you make a payment after the last reported date, chances are that it may reflect as unpaid, because it can take up to 45 days for information to be reported to the concerned bureau.
Personal information too should not be ignored. This is especially important to know to ensure that it is only your details that have been mentioned in the report.
Your CIBIL report is the key to financial good health and hence ideally should be reviewed at periodic intervals. Remember, it is better to ensure that your CIBIL score is good so that you can rest assured of being offered the most competitive credit facility when you require one.