Understanding your Credit Report

Until recently, access to formal credit in India has been limited to a select few, as banks were unable to serve the needs of the lower-income populace which much of the Indian population belongs to. The growth of fintech companies in India has given millions of Indians the opportunity to avail quick and easy credit. So, it is high time that we are aware of Credit reports and how to utilize it.

A credit report will contain your credit payment history with lenders like banks and credit institutions over a period of time. It does not provide details of your savings, investments or fixed deposits. Banks and other lenders will check your credit report when applying for loans and other forms of credit. Based on the information in your credit report they will decide whether your application can be approved or not. An important component of your credit report is a Credit Score which is a three-digit number that summarises your credit history. The score is derived using the credit history found in the credit report.

How do I check my credit report?

There are six main Credit Bureaus in India viz.

• TransUnion Credit Information Bureau (India) Limited (or CIBIL)
• Credit Rating Information Services of India Limited (CRISIL)
• Equifax
• ICRA (formerly known as Investment Information and Credit Rating Agency of India Limited)
• CRIF High Mark
• Experian

These bureaus gather data from various creditors that you have borrowed from and generate your credit report. Among this the most popular bureau is CIBIL. To check your CIBIL credit report you can visit the CIBIL website https://www.cibil.com/ . Similarly, you can visit the respective websites of other bureaus to get your credit report from them. Credit bureaus in India allow 1 free credit report in a year. However, they charge an annual fee if you want to have repeated access to it. So if you want a free credit report then you can avail of the services of companies like BankBazaar, Paisa Bazaar, and Wishfin. They provide credit reports for free along with other services like loans and credit cards. You can download the apps on your smartphone or visit their respective websites.

How do I read my credit report?

A credit report contains detailed information about the credit you have availed, such as home loan, vehicle loan, credit card, personal loan, etc. This guide will mainly be based on a typical CIBIL report but other bureaus have similar formats and the information provided here is applicable across all the bureaus. Here are the key sections of your credit report explained.

• Credit Score: Your credit score is a number between 300–900 which is calculated based on your credit behavior. If you repay your credits and loans on time you get a higher score. A score above 700 is generally considered good. A score might be a 0 or 1 means you’re new to credit or have not availed any credit services in the 6 months.

• Personal information: Contains your name, date of birth, gender and identification numbers such as PAN, passport number, voter’s number.

• Contact Information: Your address and telephone numbers are provided in this section.

• Employment Information: Your income details as reported by the Banks and Financial institutions will be provided here.

• Account information: This section contains all the details of your credit accounts including the names of lenders, type of credit (home, auto, personal, overdraft, etc.), account numbers, ownership details, date opened, date of last payment, loan amount, current balance and a month on month record (of up to 3 years) of your payments. Any default or late payments will show up here. A lender will go over this section thoroughly before approving.

• Enquiry Information: Every time you apply for a loan or credit card, the respective Bank or financial institution accesses your credit report to check whether you meet their criteria. The system makes a note of this in your credit history and the same is referred to as “Enquiries”. Every enquiry by a financial institution negatively impacts your credit score so it’s best to keep the number of enquiries at the lowest.

If you’re looking to get instant loans with minimal documentation, you can always rely on NIRA. We provide cash loans and cardless EMI services to those who are new to credit or who are not eligible for loans from banks due to low CIBIL.

Download the app here.