Your credit report is an important document that provides information about your credit history. It is a record of your borrowing and repayment habits, and it is used by lenders to determine your creditworthiness.
Reading a credit report can be daunting, but it is an essential step in understanding your credit history and improving your financial health. Let’s see the steps you must follow to read and understand your credit report.
Step 1: Understand the sections of your Credit Health Report
Your credit report is divided into several sections, each of which provides different information about your credit history. These sections include:
- Personal information: This section provides your name, address, date of birth, gender, and other identifying information.
- CIBIL Score: Your CIBIL Score is a three-digit number that is based on the information in your credit report. It ranges from 300 to 900, with higher scores indicating better creditworthiness.
- Credit summary: This section provides information about your credit accounts, including credit cards, loans, and mortgages. It includes information about the creditor, the account number, the balance, and the payment history.
- Enquiries: This section gives details about anyone who has requested a copy of your credit report.
Step 2: Review your personal information
The first section of your credit report provides your personal information. Review this section carefully to ensure that all the information is accurate. If you notice any errors, contact TransUnion CIBIL to have them corrected.
Step 3: Analyse your credit accounts
The credit accounts section of your credit report provides detailed information about your credit history. Review each account carefully to ensure that the information is accurate. This section includes information about the creditor, the account number, the balance, and the payment history.
When reviewing your credit accounts, pay close attention to the following:
- Payment history: In this section, get details of your payment history. Make sure that all payments are reported accurately, and if there are any late payments, ensure that they are reported correctly.
- Balances: Learn about your outstanding balances in this section. Ensure that the balances are accurate.
- Account status: Understand the status of your accounts in this section. Ensure that the status is accurate and that any closed accounts are reported as closed.
Step 4: Analyse your credit utilisation ratio
Your credit utilisation ratio is the amount of credit that you use compared to the total credit available to you. A high credit utilisation ratio can negatively impact your CIBIL Score. Therefore, it is important to keep your credit utilisation ratio below 30%. Review your credit utilisation ratio to ensure that it is within the acceptable range.
Step 5: Review inquiries
The inquiries section of your credit report provides information about anyone who has requested a copy of your credit report within the past two years. Ensure that all inquiries are legitimate and that you authorised them.
Whenever you apply for a loan or credit card, the lender makes a hard inquiry on your credit report, which can negatively impact your CIBIL Score. Review your CIBIL report for any hard inquiries and ensure that they are all legitimate. If you find any unauthorised hard inquiries, contact the credit bureau to dispute them.
Step 6: Dispute any errors
If you notice any errors on your credit report, contact TransUnion CIBIL to have them corrected. You can dispute errors online, by phone, or by mail. The credit reporting agency is required to investigate your dispute and correct any errors.
In summary, understanding how to read a credit report is an important step in maintaining good credit and financial health. By reviewing each section of your credit report, ensuring accuracy, and disputing any errors, you can improve your chances of being approved for credit in the future. Additionally, making payments on time and in full and limiting credit applications can help maintain a good CIBIL Score.
With the Bajaj Finserv Credit Pass, you get an annual subscription to access your Credit Health Report. Use your personalised report to get a complete overview of all your accounts and track the major factors that impact your credit health.
