‘Knowledge is the key to success’ is a wise old adage, holding far greater relevance when one talks of financial success. In today’s monetary supermarket, a thorough financial health check has become more of a prerequisite than an alternative. In such a scenario, a clear understanding of terms and concepts is elementary to become more credit savvy.
Since one’s credit score is the ultimate diagnosis of one’s financial well-being, the following topics are dedicated to educating and equipping you with enhanced knowledge in the credit domain. This can help you make informed decisions in life and, in turn, build and improve your credit character.
About the Credit Bureaus
What is Experian Credit Report?
Experian credit report offers an individual’s detailed credit history having information about both his previous and current credit cards and loans. Experian is the first Credit Information Company to receive a license in India and is therefore trusted for its innovative approaches and information services.
What is CIBIL Report?
CIBIL (Credit Information Bureau India Limited) is another Credit Information Bureau, which generates the CIBIL report and CIBIL score for individuals. The CIBIL credit report reflects an individual’s borrowing and payment patterns. Complex mathematical algorithms are applied to the client’s records, submitted by member banks and credit institutions, to arrive at a credit score and also to publish the credit report. Most of the banks and the financial institutions prefer referring to the CIBIL report when determining your eligibility for a loan or a credit card.
What is Equifax Credit Report?
Equifax credit report is a compilation of your credit history with details of your credit accounts including the loans you have taken or the credit cards you own. It also reflects your Equifax Credit Score.
What is CRIF High Mark Credit Report?
CRIF High Mark is one of those credit bureaus, which cater to the needs of all kinds of borrowers such as retail consumers, commercial borrowers along with MSME and microfinance borrowers. All these borrowers can avail their CRIF High Mark credit report reflecting analytics and managed data from the Micro Finance Data base.
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Basics of Credit Score and Credit Report
What is Credit Report?
A report which includes a person’s credit history with the detailed information of his/her credit accounts and loans, bankruptcies and late payments (if any) apart from their personal information is called a credit report. It is issued by licensed Credit Information Companies.
What is Credit Score?
Credit score can be defined as the creditworthiness of a person coded into a 3-digit number. Credit score is one of the determining factors for the approval of a loan or credit card application. This score is affected by a range of factors such as payment and borrowing patterns, the number of credit card or loan applications, credit utilization and so on.
How to Read Your Credit Report?
Credit reports usually have different sections for better categorization and easy comprehension of information. The most common sections of the credit report are:
- Credit Score: This section speaks about your credit worthiness.
- Personal Information: This section has your personal details as reported by any of your lenders.
- Employment Information: This section has your employment details at the time of opening of any of the credit facility, as according to the lender.
- Account Information: This section contains the most relevant information like the details of all your loan accounts and credit cards owned by you.
Enquiry Section: This section contains details about all the enquiries made about you from different lenders.
How to Check Your Credit Score?
You can get your credit report along with the credit score online as well as offline. You can apply for your credit score online either at the credit bureau’s website or at its affiliated financial institution. For instance, Experian is the bureau partner of Paisabazaar.com. Therefore, you can request for your Experian credit information report and credit score for free at Paisabazaar.com by filling in a few details.
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You can apply for your credit report and credit score offline as well. To do so, the interested individuals will have to download the credit information report application form from a credit bureau’s website. Fill out the form and post it to the designated address along with the relevant documents and payment (if applying for the credit report more than once in a year).
Difference Between Credit Report and Credit Score
Credit score is a statistically generated 3-digit number that indicates your credit worthiness, whereas credit report includes your credit history, personal information along with details of your loan accounts and credit cards.
CIBIL score is a 3-digit numerical representation of your credit worthiness given by the TransUnion CIBIL Limited based on your credit history.
About CIBIL Credit Score
How is CIBIL Score Calculated?
Your CIBIL score is calculated on the basis of a range of factors such as credit history, credit utilization, credit mix and duration along with other factors.
Benefits of a Good CIBIL Score
Apart from increasing the chances of getting loans or credit cards approval from lenders, a good credit score also has other advantages such as faster loan sanctions, lower interest rates and better credit card offers.
Factors that Affect Your Credit Score
Your credit score is statistically generated, hence a number of factors play a major role in determining how high or low your score should be. Factors that affect your credit score include:
- Credit utilization limit
- Repayment history
- Requests for higher credit limit
- Percentage share of unsecured loan amount
Being a loan guarantor
Myths About Credit Score
There are a number of myths associated with credit score such as using credit cards leads to increase in credit card debt, closing down a credit card will increase the score, CIBIL score is affected by one’s income and so on.
How to Repair Faulty Credit Report
To repair a faulty credit report one needs to submit a dispute resolution form with the necessary details. The credit bureau will then update your credit report after verifying the information from the lender.
Ways to Improve Your Credit Score
To improve your credit score, you need to study your credit report, make timely and full payments and avoid applying for new credit cards and loans frequently.
Maintaining a good credit score is not that tough if you are financially disciplined and follow practices to achieve a good credit score. Your credibility for paying off debts is determined by the credit score. Hence, it is advisable to be cautious. You must be aware of the bad practices that lead to a poor credit score to prevent you from committing mistakes.
Using the information above and the mentioned links can help you make informed decisions and, in turn, build and improve your credit character.
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Loans and Credit Score
- Credit Score for Personal Loan
- Credit Score for a Credit Card
- Credit Score for a Car Loan
- Credit score for Home Loan
- Loan Settlement and Your Credit Score
Your credit score is one of the key determinants that affect your eligibility for various loans such as personal loan, home loan, car loan, etc. Your chances of getting a loan approval depends on how good or bad your credit score is. Also, your chances of getting a credit card depends on your credit score partly, if not completely. This is so because your credit score is a prediction of your capability to pay off debts. Therefore, be it credit cards or be it loans, your credit score plays a crucial role in getting quick and easy credit application approvals. Read further to know how your credit score affects your new loan and credit card applications.