Thursday, 23 June 2016

Understand Your Credit Report Can Help Raise Your Credit Score?

It is very important to understand your credit report when you wish to have a good score and enjoy credit facilities offered by modern banking system. To maintain a good credit score is not a rocket science but requires financial diligence and discipline. You need to have a good credit history of paying out your loans and bills on time on the credit information report (CIR). Let’s understand in detail how knowing your credit report helps you raise your score.
Your credit report contains detailed information of your credit accounts. It does not contain anything regarding your savings and investments. All secured loans and unsecured loans such as home loan, auto loan, credit cards, personal loans and overdraft facilities are reported in the CIR. You can access your report online using CIBIL consumer login.
A typical credit report has following sections:
1. Credit Score
This section shows your credit score. For example your CIBIL Transunion Score would range anywhere from 300 to 900. Score above 700 is considered good. About 80 per cent of people with such good score tend to get their loan application approved. The credit history of your loan accounts and enquires would basically drive the score calculation.
2. Personal Information
This part has your personal information like name, birth date, gender and ID numbers- PAN, passport and voter ID number.
3. Contact Information
Here, contact information including up to 4 addresses and telephone numbers are mentioned.
4. Employment Information
This section mentions your income as reported by banks. When you apply for loan you share your income details and the member banks report that data to CIBIL and other bureaus every month.
5. Account Information
This section shares vital information regarding the credit accounts on your name. It details about names of banks and financial institutions, types of loan (such as auto, personal or higher education loan) and credit facilities used by you. The account and ownership detail including account numbers, date of opening, date of last payment, credit amount, current balance and monthly payment record for 3 years are precisely mentioned here.
6. Enquiry Information
Your report also shows enquiries made by banks when you apply for loan or credit card. The credit history with too many enquiries show that you need funds desperately and marks a bad flag.
Knowing your report by heart basically helps you assess your current credit worthiness. You get to know your current balance, what you can currently afford to pay back and how much credit you can apply for, all at one place. Practically acknowledging your current financial status you can definitely work to improve credits core.
It would be righteous to say here that your credit report helps you repair the credit score. As credit history reported on credit report holds importance so does its correctness. Without checking your report, you cannot figure out errors, if any emerge on your report. If there are errors in your current account balance or repayment history it would directly stumble upon the score. The credit score would fall without your knowledge.
Although CIBIL allows you to start a process to dispute the error to the concerned bank and as the error is corrected and reported to the credit agency the score improves. The process however may take more than a month’s time. Watch out for following common errors on the report:
1.       Computer errors regarding personal information, contact information and employment details. These need to be corrected for validating your identity.
2.       Errors on account details should be immediately reported to the bank. This may adversely affect your entire history.
3.       Unknown enquiries if spotted on the report shouldn’t be ignored at any cost. This could be a warning sign as someone else might be misusing your personal information to draw credit. You need to report it as soon as possible and stop the call and identity theft attempt.
4.       These can certainly hamper the growth of your score.

Thus it is advisable to check credit report several times a year. By checking your report you ensure that there are no errors pertaining to your personal information or account information. Also, knowing your report, you basically know your credit score and credit worthiness. All in all, knowing your report is the first step to raise the score.

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