Today, keeping track of credit score has become pretty easy as people can check their scores online quickly in just a few seconds. Knowing to read your CIBIL report is important since it determines creditworthiness. Lenders consider this score before granting any credit.
Here is a guide on how to read and interpret credit score reports easily.
How to read CIBIL report?
Understanding the CIBIL report is not as difficult as it may seem at first. Once someone starts to understand the different divided sections of the report, the process becomes easier. Read along to know how to read credit information report.
- CIBIL score
The first section of the CIBIL credit information report consists of a CIBIL score. It is a three-digit number that ranges from 300-900 with 900 being the highest score.
- Personal information
This is the second section of the CIBIL report and consists of the candidate’s personal information. Personal information includes name, date of birth, and gender. Apart from this basic information, it also contains personal details like passport number, PAN number, Aadhaar number, voter ID number etc.
- Contact information
The third section contains the person’s address, email address and telephone number as specified by the lender. Both landline and mobile numbers are included here. This contact information section contains information like permanent address, work address, residential address, and temporary address.
- Employment information
The employment section is considered important while assessing an individual’s creditworthiness and repayment capability. This section covers the details of that person’s occupation history, income and other details regarding this. However, some lenders consider those who have changed too many jobs frequently to be risky borrowers.
- Account information
Account information is considered one of the most important parts of the entire report while reading your CIBIL report as the score depends on this section. This section consists of details of the individual’s loans, credit cards and other forms of credit. The bank account details of the person are also mentioned here. For instance, if someone has applied for a home loan, the lender will check this section to judge the potential borrower’s financial impression.
There is a table in this account information section which contains lender’s name, type of credit facility, type of ownership, date of opening, account number, loan amount, outstanding balance, and a record of 36 months of payment
- Red box
This is not a mandatory part of the CIBIL report but it may be displayed sometimes. It is a red box found at the top of the “Account information” table. It indicates if a field is under dispute.
- Enquiry information
This section contains the information related to the enquiries made by the individual for loans or other forms of credit. Every time the individual makes an enquiry with a lender, his/her enquiry is recorded in this section along with their credit history. This section includes the details of loan applications such as the type of loan applied for, lender’s name, loan amount, date of application. Making too many enquiries affects the credit score, so it is advisable to apply for a loan after conducting a research and only when it is needed.
How to interpret credit report?
A score which is close to 900 is considered good. If someone manages to get a score of 800 or above, the lender will not hesitate to lend him/her money as he indicates an excellent creditworthiness.
The different levels of credit score is explained below.
- Excellent score (700-800):
This is a brilliant credit score and people with this score get many advantages from lenders like lower interest rates and other special benefits. The process of loan approval also gets easier as the lenders can rely on the person for showing great creditworthiness.
- Good score (600-700):
This is still a good credit score and meets many of the lender’s minimum credit score criteria. However, it may cause the individual a little paperwork and slightly more interest rates.
- Average score (500-600):
It is an average score and it may be difficult for people with this score to get loan approval. The person must work on improving the score for facing less hassle.
- Bad score (below 500):
Most financial institutions will not accept or approve any loan application with a credit score below 500.
Being able to read your CIBIL report is very important to be updated about your repayment capability. The credit score is a crucial factor while applying for a credit, so keeping an eye on the report is necessary so that you can work on improving the score if necessary.