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What is a Credit Report?
A credit report is a detailed summary of someone's financial history, focusing on borrowing and repaying money.
Credit bureaus or reporting agencies compile it and include information such as:
Credit reports are crucial for lenders, creditors, and sometimes employers to evaluate an entity's creditworthiness and financial responsibility. They influence decisions on loan approvals, credit terms, interest rates, and, occasionally, employment eligibility. Reviewing credit reports is essential to detect errors, ensure accuracy, and guard against identity theft or fraudulent activities.
What is Credit Score?
A Credit Score is an integral part of anyone’s financial status. It is a three-digit number from 300 to 900 that shows if someone can pay back loans or debt. Financial institutions often base this number on the consumer's repayment and credit history. Let us learn about the different credit score ranges and what they mean.
750-900
Excellent
650-749
Very Good
550-649
Low
350-549
Very Low
A credit score of 750 to 900 is considered excellent. It shows a consistent payment history and a great payment track record. If you come under this score, your credit application may get approved quickly, resulting in a good loan offer. This means it will be easier for you to get loans and credit cards.
Chances of loan approval
High
A Credit Score is an integral part of anyone’s financial status. It is a three-digit number from 300 to 900 that shows if someone can pay back loans or debt. Financial institutions often base this number on the consumer's repayment and credit history. Let us learn about the different credit score ranges and what they mean.
750-900
Excellent
650-749
Very Good
550-649
Low
350-549
Very Low
A credit score of 750 to 900 is considered excellent. It shows a consistent payment history and a great payment track record. If you come under this score, your credit application may get approved quickly, resulting in a good loan offer. This means it will be easier for you to get loans and credit cards.
Chances of loan approval
High
Steps By Step Procedure to Create Credit Report
A Credit report is a comprehensive overview of a person's credit history. It contains information about their borrowing activities in the credit sector.
CRAs keep track of a person's borrowing activities. They use this information to calculate their credit score and it ranges from 300 to 900.
Enter your mobile number linked to your bank account.
Enter the OTP received on your mobile number.
Enter your PAN card details, which include your PAN number, name and date of birth.
Confirm details to generate Credit Report
Enter your mobile number linked to your bank account.
Enter the OTP received on your mobile number.
Enter your PAN card details, which include your PAN number, name and date of birth.
Confirm details to generate Credit Report
Access Credit Report Through Mobile or Web
We let you access your credit report from anywhere and at any time. There is no restriction on accessing credit reports through web browsers or mobile phones. How convenient is that?
So, are you planning to secure a loan for yourself or your family? Have you ever checked your credit report before? Getting to know your credit score has never been so easy and so affordable. It will take you a mere two minutes to get to know your entire credit history.
If you want more details on this matter, don’t forget to get in touch with our experts right away! We are here as the helping hand you require for all your lending needs.
Why is Credit Score important?
Credit scores are indicators that allow a financial institution to assess your ability to repay the debt on time. The credit score is thus crucial in determining the risk of an individual or an asset.
How is your Credit Score Calculated?
A credit score is a comprehensive document prepared by a credit bureau that outlines your credit history. These credit bureaus gather and assess your financial information and prepare reports based on such details.
When computing your Credit score, we consider the following factors.
Loan Repayment History:
Repayment history is among the key factors considered while preparing your credit report. The report will portray you as a responsible borrower if you constantly pay your loan EMIs or bills on time. It will show that you are always at low or no risk of default.
Duration of Credit History:
The credit report is also prepared for your credit history duration. The longer the duration of your credit history with timely payments, the better and more appealing the credit score. This information on your Credit report is crucial for calculating your Credit score.
Number of Hard Inquiries:
Every time you apply for a new loan or credit card or request for refinancing any existing loan, the lending institution does a credit check. All this information is recorded and provided in the Credit report. This helps CRAs to calculate your credit score properly.
Credit Utilization Ratio:
Your credit usage is also considered while computing your credit score. A credit utilization ratio is the proportion of your total credit amount to your total available credit limit. You may already be familiar with this concept. Your Credit report will show your credit limit usage. If the usage ranges between 30-40%, you get a high credit score.
Credit Mix:
Your credit score is also prepared based on your credit types. Whether it’s store accounts, mortgages, instalment loans, or credit cards, the credit report takes all these into account. The report will give all this information, which further helps CRAs calculate your credit score. Having too many credit accounts can shorten your credit history, so it's best to avoid having too many.
Why Is It Important to Have a Good Credit Score?
A credit score is a summary of how well you have managed your debts and credit accounts. It demonstrates to potential creditors and lenders that you are reliable and able to repay the borrowings on time.
It helps you to apply for a loan. A Credit Score will help the lending institution to decide whether to approve your credit application or not.
Your Credit score must meet certain requirements for the application to be approved. Furthermore, a low-interest rate will be offered if approved.
It helps you to apply for a loan. A Credit Score will help the lending institution to decide whether to approve your credit application or not.
Your Credit score must meet certain requirements for the application to be approved. Furthermore, a low-interest rate will be offered if approved.
How To Improve Your Credit Score
Make sure to pay the credit card bills and loan EMIs on time. You should never miss a payment in any situation.
Reduce the excess dependency on credit and regularly keep the credit utilization ratio at less than thirty percent.
If there are errors in the credit score, ensure that the credit bureau rectifies it as early as possible. Also, for this, make sure you regularly check your Free credit score to notice any discrepancies right away.
Do not apply for multiple credit cards or loans too frequently. As such, it is better to wait for at least six months before availing of a new credit report once again.
It is better not to close the oldest credit card you have. Long credit history will help lenders undertake credit-based decisions with much more confidence.
Ensure the Credit report contains a balanced selection of unsecured credit products, like credit cards and personal loans. Include secured credit options too, like car loans and home loans.
Get expert advice from the experienced professionals at Piramal Finance to make significant improvements to your credit report.
Benefits Of Maintaining a High Credit Score
Maintaining a high Credit Score has plenty of benefits, from more lender choices to low-interest rates. Let’s check these benefits in detail:
High Credit Limit:
Having a good credit score means you’re creditworthy and financially stable. It means your credit score will be high, and your debt-to-income ratio will be stable. This will entice the lending institutions to loan you more money. You can easily request a hike in credit card limit or on other lines of credit.
Lower Interest Rate:
A good credit score will portray you as a responsible borrower. It shows that you pay your debt or bills on time. This will help you get a lower interest rate on the next credit you borrow from lenders. It means that the total interest payable for that credit will be lower than usual.
Increased Negotiating & Purchasing Power:
Maintaining a good Credit score will help you get preapproved or prequalified loans for a home or car by lenders. Pre-approved loans give you an advantage.
You can negotiate better prices with lenders and close any vehicle or real estate deal quickly. This is not possible with other loan options. An excellent credit report gives you the power to negotiate confidently with lenders.
You can negotiate better prices with lenders and close any vehicle or real estate deal quickly. This is not possible with other loan options. An excellent credit report gives you the power to negotiate confidently with lenders.
What To Do If Your Credit Score Is Low?
The information provided in a credit report is subject to changes. If your credit report comes with information that creates a bad impression in front of lenders, you can change it. Of course, you’ll have to work on your financial health and ensure everything falls in place. To turn your credit score from bad to good, work on these aspects:
- Timely Payment of Bills & EMIs: When it comes to a credit score, your repayment history is the first thing lenders see. If you always repay your EMIs and bills on time, your repayment history will improve and impress the lenders. Set up autopay or reminders to make sure you pay EMIs on time. Make sure your account has sufficient balance to cover the repayments.
- Pay off your existing debts: Using your full credit limit can be a reason for having a bad credit report. A credit report will show your credit utilization rate. This is the amount of credit limit that you are currently using.
Try to use only 30% of the credit limit you have, to generate a good credit report. If you have already used your credit limit, try not using your credit or EMI cards anymore. Ensure you pay off all your existing debts that will help you build a better credit score. - Do Not Perform Any Hard Inquiries Again: If you want to improve your credit report, try not to apply for any new loan or credit for some time. When you apply for credit, the lender performs a Credit score check, which impacts the Credit score and report. The report will show how many times your credit has been checked.
If it’s more than one or two times, the lender will consider you as credit hungry. They may reject your future application or charge a high-interest rate. So, you should avoid taking any credit until you have paid off 75% of your existing debts.
Why Should You Get A Credit Report?
You can get an online credit report easily. Additionally, there are many benefits to checking your credit score. These include:
A Free Credit Report
You can get your credit report for free and compare credit scores from different bureaus for free. You can get your credit report for free for a lifetime and stay updated on this matter.
Chances of Approval
Your chance of securing a loan approval increases when you know the credit report beforehand and work to improve that score.
Credit Advisory Services
We offer credit advisory services. This helps our customers improve, build, and maintain a higher credit score. This makes it easier for them to access a formal line of credit.
What is the Difference Between a Credit Score, a Credit Rating, and a Credit Report?
The table below outlines the key differences between a credit score, credit report, and credit rating.
| Credit Report | Credit Score | Credit Rating |
|---|---|---|
| It is a comprehensive, summarized copy of your credit history and resembles your creditworthiness. Most lenders use this document as your credit reference. | It is a 3-digit summarized version of your credit report. It considers all the information on the report, measures your credit risk, and computes an overall score ranging between 300-900. | After determining whether you can fulfil your financial commitments, credit bureaus provide credit ratings to businesses and even governments. Credit ratings show lenders how likely you’re to repay loans. |
Understanding The Credit Score Through Key Terms
| NA or NH | NA stands for Not Applicable, and NH stands for No History. NA in your credit report means there is no information available about your credit history. Since the report does not include any credit information, we also refer to it as NH. |
| STD | STD in credit report stands for ‘Standard.’ You’ll find this term in your loan accounts and credit report. In your report, `STD` indicates that you have paid all outstanding amounts within 90 days, or on the due date. |
| SMA | SMA stands for Special Mention Account. This indicates that we have established a designated account to record Standard Accounts that have shifted to Sub-Standard. In such cases, we receive payments after 90 days of the due date. |
| DBT | DBT here stands for Doubtful. It means that one of your loan accounts has stayed/remained as a Sub-Standard account for a year (12 months). |
| LSS | It stands for Loss. It implies that we have detected a loss in one of your accounts. LSS on your credit report means that you haven’t paid that loss amount, and it’s still uncollectible. |
| DPD | The full form of DPD is Day Past Dues. It serves as a track of your credit accounts’ payment schedules. The DPD area shows your payment, even though it is one day late. You can model DPD in one of two ways: Note or Numeric. |
What are the 4 Credit Bureaus in India?
Equifax's credit reports and credit scores are instrumental tools utilized by lenders, financial institutions, and businesses to evaluate creditworthiness and facilitate informed lending decisions. With a commitment to data accuracy and innovative analytics, Equifax empowers its clients to make sound financial decisions and navigate the complexities of risk management in today's dynamic financial landscape.
It provides credit scores and detailed credit reports. These reports display the credit history of individuals or companies. Banks, lenders, and financial institutions use CIBIL's credit reports to assess creditworthiness for loans and credit cards.
The CIBIL score is important for lenders to decide if they should give a loan. It shows the risk of the person's credit. CIBIL's insights are pivotal in facilitating responsible lending practices and enabling individuals to access credit opportunities aligned with their financial profiles.
CRIF uses advanced technology and data analysis to provide useful information and tools for managing credit and preventing fraud. They help businesses in different industries worldwide with efficient credit management.
Lenders and institutions use credit reports and scores to evaluate creditworthiness and manage lending risks globally. Experian helps businesses use reliable data to reduce risks, improve customer relationships, and make informed decisions.
Frequently Asked Questions
Why does my credit score keep changing?
It is natural for your credit score to keep changing over time. Your credit score changes when new information is sent to the three national consumer reporting agencies (CRAs).
What is the minimum score needed in a credit report to get a personal loan?
Piramal Finance offers personal loans to applicants who have a credit score above 650.
Can everyone access my credit report?
No. Not everyone can view your credit report.
Why is a PAN card required for checking the credit report?
To perform a credit report check, you require a PAN card since the credit score links to the PAN card number. Also, individuals need PAN cards for tax return filing and address verification.
Can credit report inquiries affect the report?
A hard credit query may lower your credit score by up to 10 points. This harm may not always be that severe.
What is the significance of the Credit report?
A Credit report is a useful tool for banks and NBFCs. It helps them to assess an individual's reliability and creditworthiness. This helps them to determine their ability to repay any debts in a timely manner. The significance of the credit score thus lies in the individual’s risk assessment.
Is it possible to delete information from the credit report?
Unfavourable data that is true cannot be changed and usually stays on your credit reports for seven years. Creditors look at your Credit reports to evaluate your past debt repayment history. They use this information to decide if they will give you credit and what terms to offer.
What do I need to do if I find errors on my credit report?
To fix a mistake in your credit report, start by telling the credit agency about the wrong information. You must provide copies of supporting documents and a written explanation of your claim.
Who can access my credit score?
Prospective lenders, present creditors, insurance providers, and occasionally even your employer can check your credit score. These individuals and institutions have the authority to examine your credit history. They can do so when you request credit or after they have granted you a loan or credit.
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