Cibil Score – Jargon You Should Know To Read Cibil Report
A CIBIL score is a three-digit numeric number that basically represents the creditworthiness of an individual. This numeric summary shows the credit history and repayment record of an individual with a score that ranges between 300 to 900. Well, the score gets generated here after taking into account the credit history, which is being available in the Credit Information Report (CIR). This report basically gives a quick idea of an applicant’s loan/credit card eligibility to the potential lenders. And, to give the score there are three most reputed agencies in the country namely-CIBIL, Equifax and Experian.
Well, there is no particular standard set for a good or bad score. Just to give you a sneak peek, a CIBIL score basically shows the past and present credit behaviour of an individual and basically gives lenders a snapshot of a credit health and loan repayment record. Many lenders consider a score of 700-750 out of 900 good as far as availing a loan/credit card is concerned. If an individual maintains such a score, it would easier for him/her to grab the lucrative deals. Yes, a good score is a gateway to get a good deal as it opens the prospects to get a loan at a lower interest rate along with the flexible repayment options and bigger loan amount. And, you know why? Because lenders think that you are at a lower risk of default when it comes to loan repayment, thus will offer you attractive terms and conditions that might not be available to those who have a low CIBIL score.
However, the same goes with the case of credit cards. On maintaining a healthy score, you would be able to get the best of privileges and offers on your card. The credit card company before offering the card must check the CIBIL score, basically, the past record of an individual and on the basis of the same decides whether he/she is reliable or worthy enough to avail the card or not.
The medical report determines your physical health, whereas Credit Information Bureau (India) Limited (CIBIL) report determines your financial health. The healthier your credit report is, higher are the chances of credit approval at better interest rates. It is like your financial character certificate. If the numbers are in a safe limit, you are a safe bet for the lender. However, maintaining a good CIBIL score and healthy CIBIL report is an ongoing process. If your CIBIL score is poor, you can work towards improving it.
Also known as Credit Information Report (CIR), it includes five sections along with your CIBIL score. Let us understand the different sections in a CIBIL report in detail and their relevance to you.
The score ranges between 300 and 900. Higher the score, the better your credit health is. The section also mentions percentage of new loans sanctioned in the last one year in various score bands. If you haven’t taken any credit in previous years, the score can be NA or NH, meaning no history available or new to the credit system.
It mentions your name, PAN number, passport number, date of birth, Aadhaar number etc. Banks and lending institutions you are associated with share this information with CIBIL.
Action: Go through all the mentioned information to check if it is correct and updated.
The contact details shared by banks and other lending institutions are mentioned in this section. Address/es, phone numbers, and e-mail IDs are given. Up to four addresses can be mentioned, which could be your permanent, correspondence, temporary and office address.
Action: Check for any discrepancy or incorrect information and get it corrected/updated.
One of the primary factors to evaluate your creditworthiness is your employment record. This section in the CIR enlists details about your employers and monthly/annual income. The income mentioned is not the latest. It is the one declared to the lender at the time of previous loan application.
Action: This section is for information only and helps lenders evaluate your income growth.
This is one of the most important sections that not only impacts your CIBIL score but is also evaluated in detail by potential lenders. It includes lender’s name, type of credit, account number, account status, days past due (DPD), date of account opening, loan amount, last payment date, current outstanding, total outstanding and monthly record of your payment of EMIs and bills for last three years.
Action: Make sure the details are correct. For example, a typing error in date by even one day can affect your score. Also, check if your account status has been marked as settled or written off as ‘filed’. If not, it can have a negative impact on your CIBIL score. DPD is the number of days by which you delayed your payment. It should ideally by ‘000’, i.e., payments are done on time.
In this section, there are details about which lender has enquired about your CIBIL score and CIR. It also mentions the purpose of applying for loan and the loan amount. Too many enquiries from different lenders highlights the desperation for a loan. This may make the lender cautious about sanctioning your loan.
Action: Think thoroughly before applying for a loan with any lender. High number of enquiries can derail your chances of getting a loan.
The report will contain information about your contact (addresses of residence or workplace, email ids and phone numbers)/personal (passport number, your name, date of birth, voter ID, PAN number)/employment (employers and income during loan or credit card application).
In the credit report, information will surface about your account details (open loan, credit card, details of lender like date of initiation, name, date of last payment, joint or individual account holder type, total outstanding amount, loan amount paid, bills paid and more).
If there is a red band on any information in credit report, it means that the subject is under dispute and you can discuss with the bank about the same to sort out any errors.
Your CIR could depict a CIBIL TransUnion Score. The score here is between 300 and 900, which is percentile figure of over past one year for a special financial band. If the score is below 300, then it indicates a very bad credit health, and can be tagged as NH or NA. In case there have been no credit transactions over past few years, even then the status of score could be NA or NH.
Credit report also reveals how many credit enquiries you have made over a period of time. With help of your CIR, you will come to know who has you on their avoidance/prospective customers' list.
CN: Control number revealed at the top of CIR, which is utilized as reference for raising dispute with CIBIL or obtaining report in future.
DPD: Days Past Due tells the number of days since the payment due date. Indication other than 'XXX' or '000' is considered negative.
Written Off Amount: It is the amount on loan or credit card, which has been lost to the loan taker. The effect of this status is bad on CIBIL score.
Settlement Amount: It is the amount which you will pay to lender, normally lesser than the actual loan amount to be paid. The situation arises on disputed payment, and has a negative impression on CIBIL score.
AC (Asset Classification): Some Banks reports DPD as per the asset classification norms defined by RBI.
Amount Overdue: It indicates the total amount which has not been paid to the lender on time (includes principal and interest amount).
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