27-June-2015 written by : FSI-Team
A credit report consists of basic yet detailed information regarding loans, credit cards, delinquent accounts, and accounts that are also positive. All of this information that is gathered into an archive to determine what kind of credit you possess and if there is suspicious activity noted in your account.
First of all, credit scores more than 700 can determine what kind of interest rates you get and maximum loan amount you can apply for. Creditors look at high credit scores, but also ones that are consistent. Regardless of the possibility that your score is low but you are diligent about making payments, lenders can cut some slack when it comes to getting a loan.
The credit score isn't the main thing that banks look into. They will examine your entire credit report to determine how long you have had credit with specific companies, and if you pay them regularly. Different factors aside from your credit score are also massively important, especially for bigger loans. Your entire credit history will be looked at when applying for mortgages and other big time loans, so remember that each time you fill out a credit card application or spend without responsibility.
You should use your CIBIL report or Equifax report or other credit report to keep a track of your credit accounts and to improve your credit score. Some people actually forget about their different accounts in different banks and find it hard to manage these multiple accounts - which eventually go bad and damage their credit score. Instead, you can manage your credit obligations by looking through all your accounts and keeping track of balances owed, through your credit report. Credit reports can be obtained regularly for a small expense. If you have seriously damaged credit, then getting successive report updates and taking correctives measures to improve your credit score is suggested.
If you have high balances on your credit cards, it will bring down your credit score. This is genuine, regardless of the possibility that you make each and every payment on time and pay more than the minimum amount due each month. If your outstanding balance is more than about 30-35% of your credit limit, this is considered as a negative factor. This is because amounts owed out of the total available limit constitutes credit utilization ratio and a higher credit utilization ratio is considered negatively while determining your credit score. Obviously, it is also negative if you have late payments and having a consistent history of late payments.
One of the more important uses of a credit report is to determine if you have been the victim of identity theft. Since your credit report shows all activity, you can pinpoint if someone has applied for a credit card in your name or if illicit activity is being done on any of your bank or credit accounts. It is important to get your credit reports just in case this does happen. Reporting identity robbery as soon as it happens will help return things to normal at a faster pace. Delaying the methodology will just make it more difficult to catch the perpetrator.
That is why checking your credit report at regular intervals is considered a good habits. It helps you spot errors or inconsistencies in your credit report faster.