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A credit report is a document, which details your financial history. Your credit report would include details of all forms of credit you have undertaken. The key types of credit or borrowing instruments that form part of the credit report include credit cards and all sorts of loans - personal loan, home loan, car loan, etc. to name a few. The important thing to note here is that this information is a historical representation, so in case you have never taken a loan or a credit card, your report, when generated will reflect the same.
Credit information companies charge customers for accessing their report. Take for example, you have to pay Rs 1,200 for downloading your credit report and receiving free quarterly updates for a year. However, we, at Paisabazaar.com, have simplified the process for our customers. You can access your credit report free of cost anytime anywhere and also get free monthly updates!
Apart from the historic records pertaining to your borrowing instruments such as loans and credit cards, your credit report also includes the following key identity information:
In India, these reports are prepared by companies known as credit reporting agencies or credit bureaus, who collect the borrowers information from banks and NBFCs (non-banking financial companies) as well as various government agencies such as the Income Tax department. Three credit reporting agencies provide these reports in India - CRIF High Mark, Equifax, Experian and CIBIL TransUnion. Each of these companies have slightly different credit scoring models, hence the same individuals credit score can vary in reports prepared by different agencies.
CIBIL stands for Credit Information Bureau (India) Ltd. and it was set up as India's first credit bureau. Currently, CIBIL has teamed up with TransUnion, a globally recognised credit rating and analytics company to provide CIBIL credit report to Indian individuals. Lenders who are registered members of CIBIL submit monthly reports to CIBIL regarding its borrowers and CIBIL TransUnion prepares its reports based on such information. CIBIL credit reports are not free and the package costs Rs 1,200 for the first report and quarterly updates available for one year. Key Institutions that have holdings in CIBIL TransUnion include Bank of India, Indian Overseas Bank, Bank of India, ICICI Bank, India Alternatives Private Equity Fund, Aditya Birla Trustee Company Private Ltd., Union Bank of India, Bank of Baroda and Trans Union International Inc.
Experian India is a completely owned subsidiary of Dublin, Ireland-based Experian LLC and operates as Experian Credit Information Company of India Private Limited. Experians credit reports include details of all your previous loans and credit cards, however, it uses its proprietary statistical algorithm to calculate your credit score hence the score provided by Experian would be different from that provided by CIBIL TransUnion and Equifax. Experian India does not currently provide free credit reports and you can get hold of yours for a specific fee. You can access your Experian credit report online as well as through mail to check your eligibility for loans and credit cards as well as to identify instances of identity theft. You can get a copy of your free Experian Credit Report through Paisabazaar.com and you get an updated report for free every month. Some leading Indian financial institutions that have collaborated with Experian include Union Bank of India, Sundaram Finance, Punjab National Bank, Magna Finance, Federal Bank, Axis Bank and Indian Bank.
Equifax is an Alanta, US-based international organisation engaged in providing information solutions for the workforce, commercial and consumer segments. Equifax India operates as ECIS (Equifax Credit Information Services Private Limited), which is a collaboration of Equifax with leading financial institutions in India such as Union Bank of India, Sundaram Finance Limited, Religare Finvest Limited, Kotak Mahindra Prime Limited, Bank of India, Bank of Baroda and State Bank of India. The consumer credit bureau department of Equifax India has been operational since September, 2010 and you can get a copy of your free Equifax Credit Report through Paisabazaar.com.
CRIF High Mark is Indias only full service credit bureau which provides credit reports for individuals across Retail, Agri and Microfinance lending, as well as Businesses. CRIF Credit Report includes a Credit Score in the range of 300-900along with details of all your current & previous loans and credit cards as well as your personal details captured by the credit bureau. You can instantly access your CRIF Credit Score online for a fee of Rs. 500. CRIF, included in FinTech 100 listisamong the leading providers of banking credit information in continental Europe. It is also among the key global players who specialize in business information, analytics, scoring, decision and credit management solutions. CRIF High Marks other investors include State Bank of India, Punjab National Bank, SIDBI, Edelweiss and Shriram City Union.
The primary purpose of these reports is to help lenders such as banks and NBFCs determine the credit worthiness of new loan/credit card applicants. Your report contains data regarding how closely you have followed the payment schedule of your previous/current loans and credit cards. In case of missed payments or past due payments, this information is also present in the report and related penalties are applied when calculating your credit score. The credit score itself is a 3 digit number, which is derived statistically by taking multiple parameters into account. As a rule of thumb, the closer you are closer to 900, the more credit worthy you are believed to be by the prospective lender. Conversely, the closer your score is to the 300 mark, the less credit worthy you are determined to be and the less the probability of your loan/credit card applications being sanctioned by a prospective lender.
However, prospective lenders are not the only people who have access to these reports. You can also access a copy of your own report. Using your credit report, you can figure out your eligibility for loans and credit cards that you may be interested in. It is in fact recommended that you get a copy of your report at least once a year to ensure that the information in the document is up to date and correct. Errors in your credit report can cost you dearly as they may lead to rejection of new credit card/loan applications as well as availability of lesser loan amounts or you might be charged higher interest rates on loans and credit cards issued to you.
If you have been rejected for a loan or credit card in the past, there is a high probability that it happened because there is information in your credit card that marks you as a borrower with low credit worthiness. But things can get better with a small amount of effort and going forward you will have the opportunity to improve your credit worthiness. For starters, any information featured on your report only stays there for a limited period usually five years. So any information beyond that period is replaced by the new information that you add. So any information beyond that period is replaced by the new information that you add. So start following the tricks and tips mentioned below to start laying the foundation of a good credit score and a blemish-free credit report in the future:
Among the above, the main reason why many people have a low credit score is due to late payment of EMIs and credit cards, which is easily avoidable through a small amount of financial discipline. The other common reasons such as a high debt to credit limit ratio and multiple outstanding loans is usually as a result of lifestyle inflation and also avoidable through a small degree of financial planning.
As mentioned earlier, credit reports can be requested by individuals for themselves. In India, you can request reports from Equifax, Experian, CIBIL TransUnion and CRIF Highmark. In most cases, the turnaround time i.e. time duration between application submission and receipt of the report will vary as will the associated charges and the documents required. For instance, the approximate cost for applying for your credit report from CIBIL, along with quarterly updates, is approximately Rs. 1200. However, similar credit report and monthly updates are free in case you apply for your credit report from Paisabazaar.com. In simple terms, you can apply for a copy of these reports for yourself either online or offline.
In case of an online application with the credit bureau you need to do the following:
In case of online reports, the credit bureau sends those out via password-protected email attachments to your registered email id and through speed post, courier sent to your home address within 7 to 10 working days.
*If you apply for a free online Experian Credit Report by logging on to Paisabazaar.com.
In case you plan to apply through the offline route, you need to do the following:
In case of offline applications, you should receive your report within 10 working days by courier at the address mentioned by you on the application form. You can also check your application status online in the interim.
Due to the interchangeable use of these closely related terms, there is often confusion between the terms credit score, credit report and credit rating. Following is a table comparing these three terms**:
A statistically generated three digit number that sums up your credit worthiness.
A historical record of the repayment schedules of all loans and credit cards of an individual.
This is applicable to companies, countries and various exchange traded funds. Credit rating acts as an equivalent of a credit score for these.
A high credit score (closer to 900) improves your chances of getting accepted for a loan and closer you are to 300 (low credit score) adversely affects you chances of successful approval for loans/credit cards.
A clean credit report leads to a good credit score and through historic data proves that the borrower has a good track record managing various debt instruments.
Credit rating is usually denoted by grades such as AAA, AA, B++ etc. A company rated as AAA would be able to raise funds at a much lower rate as compared to companies with lower ratings.
Changes depending upon the credit related behaviour of the individual.
An entry in your report stays on for around 5 years till it is replaced by newer entries.
Changes depending upon the performance of the industry, the market or the company/country/fund.
**The above table is indicative and the information provided is subject to change.
Similar to individual reports, a business credit report is also generated by various credit bureaus and these reports play a major role in determining the sanction of business loans. You can get a business credit report from CIBIL TransUnion, Experian, CRIF Highmark or Equifax. Unfortunately, a free credit report from Experian through Paisabazaar is currently only available for individuals therefore you will have to pay a fee when you seek a business credit report. Additionally, business credit reports take a few more business days to be prepared and sent as compared to an instant credit report that is available to individuals online for a fee.
A credit report is analogous to a medical file and you need to be well-versed with some key terms when reading this report that describes your financial health. The following are some must know terms that are key to understanding your paid or free credit report:
NA/NH : In case you do not have a credit card and have never a loan in the past, this is what your credit score would look like. Otherwise, it could mean that you have no credit activity for the past 2 years or that you have no credit exposure as you use add-on cards that are linked to your spouses or parent's account.
STD : This entry is found against loan/credit card accounts if payments are made in a timely manner or made within 90 days of the due date.
SMA : An account classified as special mention account (SMA) if payments have been delayed loan/credit card for over 90 days.
SUB : This refers to substandard and a borrowing account is classified as SUB if it has been a non-performing asset for over 12 months.
DBT: An account is classified as DBT (doubtful) if the account has been in SUB status for 12 months.
LSS : Lenders tag a loan/credit card account as LSS signifying loss if an account remains uncollectible after having been previously tagged as DBT.
DPD : Days past due (DPD) is a tag attached to an account and it indicates the number of days by which a scheduled payment was delayed for the account. Ideally this should show up as 000, meaning no late payments.
Written Off/Settled Status : Though this section appears on every report, in many cases the field is left blank. In case it is populated, it means that the lender and you came to an agreement after you were unable to make the regular payments on a previous loan/credit card. WO = Written off, Restructured Loan, Settled and Post (WO) Settled are the terms this field may be populated with.
The terms mentioned above are just a representative list and the list is by no means exhaustive.
Credit score is a 3-digit number usually between 300 and 900 . It is created using a complex statistical model that summarizes the past credit information of an individual. The number reflects the probability whether a borrower will pay off the loan in a timely fashion. A high number means you have been paying off your past dues (towards loans or credit cards) regularly and have rarely delayed payment. As a result, lenders have more confidence in extending credit to borrowers with high credit score.
Your credit score is only part of your credit report. Your credit report covers your entire history of dealing with credit (loans and credit cards) including your history of payments (on time or delayed). Your credit history would also show the current status of each credit account – active, closed, delinquent, settled etc. These as well as other details of your credit report form the basis of your credit score.
The cost of getting a copy of your credit report varies from one credit bureau to another. It will cost you around Rs. 1,200 to get your report if you approach the credit bureau directly. By paying Rs 1,200 you will get the credit report and quarterly updates for a year. However, if you apply for your credit report through Paisabazaar.com, we will provide you a free Experian credit report, along with our easy-to-understand report analysis and we will update it every month for free as well.
CIBIL score is a 3 digit credit score which is calculated and furnished by TheCreditInformation Bureau (India) Ltd, which is Indias oldest credit bureau and hence many leading lenders shows their interest for Good CIBIL score. However, credit score is a three digit number which is calculated by credit bureaus on the basis of ones past credit history.
Credit report is applicable to individuals and is provided by one of the four Indian credit bureaus CIBIL TransUnion, Experian, Equifax or CRIF High Mark. CIBIL Score is the score provided by CIBIL TransUnion. Credit rating, on the contrary, applies to companies and is provided by rating agencies such as CRISIL, ICRA, etc.
A high credit score is an asset when it comes to getting new loan and credit card applications approved. A high credit score (closer to 900) implies that you have good financial discipline and tend to pay off your dues on time. Thus, your chances of being approved for additional credit, in the form of a new loan or credit card, are higher. This is so because lenders perceive borrowers with high scores as trustworthy. They notice the financial discipline of applicants and accordingly decide whether to extend new credit or not.
Credit score calculations use information from four key areas of your credit report: payment history of previous credit, number of active accounts, age of the credit account and your credit to debt ratio. These are the major factors that affect your credit score and are included in your credit report.
Your credit score changes according to changes in your credit report. Therefore, your score is liable to change as new credit information is added or removed. Such changes include addition or closure of a credit card or loan account. That said, banks and other financial institutions report your information to credit bureaus once every month.
You can apply for a credit report any number of times, however, as lenders report your credit information only once a month, you might not observe any change in your credit score before an interval of 1 month has passed between reports. If you apply for an Experian credit report through Paisabazaar, we will update your report every month at no charge whatsoever.
Having multiple credit cards does not pose a problem by itself. However, having large amounts of unpaid credit card debt can cause your credit score to decline as you would be considered a risky borrower by banks. High credit card debt is considered to be a key factor that promotes future credit defaults. For more information, read Factors to consider before opting for multiple credit cards.
When you check your own credit score or access your own credit report, it is counted as a soft enquiry. As a result, your credit score remains unaffected no matter how many times you check your credit score. However, if banks and NBFCs access your report, it is seen as a hard enquiry and can impact your score if multiple hard enquiries are recorded within a short time period.
When you submit a new loan or credit card application, the prospective lender will access your credit score and report from one of the credit bureaus. This counts as a hard look and shows up on your credit report. Therefore, if you submit multiple applications within a short time period, you would be classified as a credit-hungry borrower and this can adversely impact your credit score. For further information, you can read Tips to improve your credit score.
Paying bills on time is generally the single most important contributor to a good credit score. Being late on any bill, for any length of time is considered a possible indication of future non-payment of debt and is viewed negatively by lenders. Avoiding late payments is the best way to ensure a good credit score.
If you pay off a loan completely or close out a credit card account, there is usually no immediate impact on your credit score and the account is marked as closed on your report. However, in case of a credit card account, make sure that you keep track of your credit utilisation ratio subsequent to closure of the account, as a high utilisation ratio makes lenders perceive you as a credit hungry borrower leading to a decline of your credit score.
Yes. Your role as a guarantor shows up on your credit report and if the primary applicant is unable to pay off the loan, you will have to make the balance payments. Your credit score will be adversely impacted in case you too are unable to repay the loan.
At present, there are 4 credit bureaus operating in India - CIBIL TransUnion, Experian, Equifax and CRIF High Mark. All of these credit bureaus have their own unique scoring models and offer credit scores to Indian residents who subscribe to credit in the form of credit cards or loans. Your prospective lender may decide to obtain your details from one or more of these credit bureaus when you submit a new loan or credit card application.
No. Each credit bureau has its own unique scoring model therefore you score will be different in each case. However, rule of thumb is - the closer your credit score is to 900, the higher your score and the better your chances of being approved for additional credit (new credit cards/loans).
For starters, we are one of the few companies in India that provide credit score and report for free. While bureaus might charge you Rs 1,200 for the report and quarterly refreshers for a year, we provide all this for free! But thats not all. We will also give you online access to your Experian Credit Report, along with its complete analysis. Additionally, we will provide you with free updated credit report every month containing any new information that is reported by your lender(s).
Credit scoring models cannot generate a score without enough past credit information. If you have a very recent credit history or havent taken a loan or credit card in the past, you probably will not have a credit score available.
Just like a medical report, your credit report will also include some key terms and abbreviations that explain the status of specific accounts. Some of these are:
For additional details, you can read How to Read Your Credit Report.
Your credit report has five key sections
The key factor that affects your credit score is your payment history (credit card dues/loan EMIs), followed by the type of credit and the amount of money you owe to various lenders along with your available credit utilisation ratio. So you can maintain a high credit score as long as you have made your EMI/Credit Card payments on time and havent gone overboard with respect to your unsecured loans such as personal loans/credit card debt. In case your credit score has suffered due to past mistakes, start by paying off your current dues and ensure you stick to your payment schedules going forward so that you can start on the road to recovery. For more details, read Ways to Improve your credit score.
Credit report errors are classified into 3 categories
Yes. Though extremely rare, a loan or credit card you never applied for might appear on your credit report. There are two possible reasons to this firstly, the bank/NBFC might have made a mistake when reporting this data and ended up switching your records with someone else - this is just a clerical error and represents the less drastic possibility. The second and more drastic possibility is that you are a victim of identity theft. In this case, your personal details, such as PAN Card and Aadhar Card, are stolen to obtain loans or credit cards. In either case, your credit score may be impacted. So get in touch with the credit bureau as well as your bankers and other authorities in order to get the erroneous records rectified.
To get your credit report corrected, reach out to us. We have partnered with Credit Seva to help our customers get actionable insights with respect to improving credit score and correcting any credit report errors that might be present.