In this day and age most people have become dependent on credit. Owning a home, car, funding a wedding etc. have become much easier thanks to the various credit facilities extended by financial institutions. However, despite the rising popularity of credit, many still do not know about the function of the credit bureau and have limited understanding about their credit reports. Being credit aware is important as it can help you with bad credit fix, enhance credit score etc. that in turn eases your financial journey. In this article, we will look at what one means by CIBIL report and credit score as well their importance.
To borrow money from financial institutions, your credit report and score plays a big role. The credit rating is assigned to you by the credit bureau. TransUnion CIBIL Limited is the country’s first Credit Information Company. Popularly known as CIBIL, the institution holds the records one’s payments in relation to loans and credit cards. Credit Information Report and the CIBIL TransUnion Score, the two CIBIL products, have brought drastic changes in the way credit is handled by financial institutions and customers.
A credit score, generally referred to as CIBIL score, is a three-digit number that reflects your creditworthiness. The number is determined based on the elements found in the credit report. Financial institutions look at your CIBIL score to estimate whether you will be able to repay back the loan amount on time. The credit bureau uses advanced analytics for calculating the score and then assigns the individual a number between 300 and 900. The closer the score is to 900 the better. It is important to enhance credit score, if your digits are below 750. The first and the foremost way to enhance credit score is by ensuring all payments are made on time. Multiple payment defaults can bring down your score. Lowering your credit utilization rate is another means to enhance credit score. Also, it helps to maintain a healthy credit mix; do not hold too many unsecured loans. Putting into practice different measures to enhance credit score is mandatory for all as it will help you avail credit easily and at low rates of interest.
If want to check your score, you would need to visit the official website of CIBIL and fill in the online score request form. You would then have to fill in the kind of subscription you require and your personal details such as email address, date of birth, gender and PAN number. After entering the required details, the site will direct you to the payment page. When the payment is done, you would have to submit authentication details, and once this step is successful, you will receive your score in a matter of some hours via email.
A credit report contains details about your credit history. Financial institution run a credit inquiry i.e. make a request to check your credit report before extending credit. The report is useful in identifying your true financial standing. Some of the information that can be found in your credit report include – defaults on loans (if any), number of inquiries made by banks and other financial institutions, types of credit used, payment history etc. Checking your CIBIL report at least two or three times is required as it helps you stay aware of your financial position. In case you spot any errors, you can raise a CIBIL dispute which in turn will ensure bad credit fix. Undertaking bad credit fix by getting errors in the report rectified is also a means to enhance credit score. Hence to make sure that no errors have crept in or your accounts are being misused, it is important to check your credit report at regular intervals. In case it occurs, raise a dispute with the bureau who then will undertake bad credit fix.
It is not just the banks that have an interest in your credit score and report. The other parties that can show interest in your credit history include employers (to making hiring decisions), landlords (to determine your ability to pay rent) and sometimes even by insurance companies (to decide on the premium). Now since multiple parties can look at your score, it becomes essential to undertake bad credit fix in case you have a weak score. If your credit utilization rate is high then one way to conduct bad credit fix is by getting a higher credit limit and spending less. If a particular line of credit is hurting your score then focus on getting rid of it by paying it off sooner. Striving to enhance credit score is necessary as it creates a positive image in the minds of the financial institutions. Remember, the closer the three-digit figure is to 900 the easier your financial journey will be.