Building a good credit report is an important aspect of financial health due to many reasons. CIBIL report, which is the credit report issued by credit information agency CIBIL, showcases the history of an individual’s financial behaviour. For any individual, knowing “what is CIBIL report" is crucial to maintain a good credit score.
Credit Information Bureau India Limited (CIBIL) maintains credit records of individuals and small businesses, which, in turn, helps lenders assess their creditworthiness. Banks, NBFCs and similar financial institutions study this report to assess the risks associated with lending funds to the borrower. Let’s first discuss what a CIBIL report is.
What is CIBIL report?
A credit report keeps track of every financial move of an individual and maintains a score that indicates his/her credit behaviour. Among the four credit information companies licensed by the Reserve Bank of India, the Credit Information Bureau India Limited (CIBIL) is the most widely recognised credit information bureau in India. A CIBIL report is a detailed document that provides a comprehensive overview of a person’s entire financial history.
This is a cumulative record containing details about an individual's borrowing and repayment history, including information about credit cards, and ongoing and applied loans. CIBIL is responsible for collecting data from various financial institutions and updating the credit report of an individual after regular intervals. It is crucial to understand CIBIL reports to maintain or achieve a good credit score.
How to read CIBIL report?
There are several components of a CIBIL report indicating different aspects of an individual’s financial health. Since this is a comprehensive report, it is essential to understand each of them. Here are a few aspects to look for in a credit report:
CIBIL score
After collecting and processing data, CIBIL comes up with a score between 300 and 900 for every individual. This score reflects the creditworthiness and financial behaviour of a person. Lenders assess how reliable a borrower is based on this score before sanctioning a loan such as a home loan. To maintain a positive credit profile, a credit score above 700 is necessary.
Personal information
This section within a CIBIL report contains personal data about an individual such as date of birth, Aadhaar details, voter card number, passport details, PAN and driving licence number. Financial institutions can verify the same from here.
Contact details
This segment of a CIBIL report contains data including a person’s residential and/or office address, phone number (mobile and landline), and email address. There are a few sub-categories in this segment such as permanent and temporary residential addresses.
Occupation details
An individual’s source of income depends on his occupation and it plays an important role in establishing creditworthiness. It helps the lenders to understand if the borrower would be able to repay the loan. Thus, occupation details, including employment type, are mentioned in the credit report.
Credit account information
Information related to all the financial accounts held by an individual is mentioned in a credit report. This section mentions all of the credit facilities and account ownership details. It includes the types of loans, sanctioned amount, repayment history, outstanding balance, and opening and closure dates of all existing credit accounts.
Information about enquiries
Under this segment of the credit report, the records regarding the credit enquiries placed by the lenders are mentioned. Since a lender places an enquiry whenever an individual applies for a loan, too many recent enquiries might indicate poor financial health.
Importance of CIBIL/credit report
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CIBIL report reflects the credit history of a borrower. It is crucial to maintain a positive credit profile because it helps to create a good impression on lenders. Since it is a comprehensive report, it showcases if an individual has paid installments on time or if they have a history of defaulting on loans.
While the process of loan approval can take some time because it requires a thorough assessment of the applicant's credit history, a pre-approved loan can quicken up this procedure. Generally, financial institutions such as banks and NBFCs offer pre-approved loans to their long-standing customers. To check for such pre-approved offers, one can visit the official website of their preferred lender and enter their name and contact information.
Additionally, for those looking to enhance their borrowing capacity, knowing how to increase CIBIL score is essential. A higher score can lead to better loan terms and quicker approvals.
Understanding CIBIL/credit score
CIBIL gives a score between 300 and 900 based on the creditworthiness of an individual. A good CIBIL score is considered anything above 700; any higher than average value in the range is considered to be a good score.
Individuals can build a score higher than 700 by ensuring timely repayments of their loans as well as credit card bills. At the same time, they should apply for different types of credits, but not all at once.
Ways to check CIBIL score
Individuals can check CIBIL score for free by following these simple steps:
Step 1: Visit the official website of CIBIL (https://www.cibil.com/) and click on “Get your CIBIL Score.”
Step 2: Navigate to the “Free credit report” option.
Step 3: Enter the required details and complete the identity verification process by entering the OTP sent to the registered mobile number.
Step 4: Go to the “Dashboard” to see your CIBIL score.
In this way, individuals can check their CIBIL score by themselves. They can also apply certain strategies to improve their CIBIL score over time.
To answer “what is CIBIL report," it is best to note that this report is vital when it comes to getting easy approval for loans. Lenders assess this report to check whether the borrower can be trusted with a credit option.
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