We have already written some pieces on credit bureau reports, and still find queries from our borrowers, about how to read their respective credit bureau reports. Friends, it’s very important that you understand how the credit report or credit information report works. How it works for a credit borrower, and how it works for a credit lender. Luckily, you have the Loan Singh Blog; that gives you great insights onto the world of credit, loans and the pieces of plastics you carry in your wallet or clutch (read “credit cards”). Through this piece, we break down the credit bureau or credit information report to its bare minimum. We will look at each section on the 4-page report, and try to make it easier for you to understand. Before we jump straight to the credit report breakdown, let us first know who generates a credit report, and what makes it so important in getting a personal loan.
Simply put, a credit bureau’s task is to collect and compile credit information of individuals from PAN India. Credit institutions like banks, digital lending platforms, government offices and debt collection agencies send credit related information of borrowers to the credit bureaus. The credit bureau acts like a repository of credit information. A credit bureau has to be licensed by the Reserve Bank of India. The 4 credit bureaus operating in India are CIBIL, Experian, Equifax and Highmark, with CIBIL being the most prominent. When you approach a credit lending institution like a bank or Loan Singh, a hard inquiry is raised by the institution to the credit bureau. As a personal loan does not require collateral to avail, your credit worthiness and income are the only requirements in getting the personal loan application approved.
A credit bureau does not interfere or influence in the credit approval process of credit institutions. They merely provide credit information to credit institutions. To help credit institutions filter out credit deserving or risky borrowers, the bureau generates a credit bureau report aka Credit Information Report. The report contains all the credit information that the prospective borrower has availed. Also seen in the report is the repayment discipline maintained by the individual. Calculated from this information, is a Credit Bureau Score; which allows credit institutions to determine if the individual is credit worthy, or not.
Credit Bureau Report
A credit bureau report is a systematic representation of your credit information. The information includes your loan EMI repayments towards loans and credit cards. The credit bureau report does not include any information based on your investment or savings. The report mentions your Name, Date of Birth, Residential address, PAN, passport number, voters ID number, contact details, type of credit availed, size of the loan or credit limit, outstanding current balance, any overdue amount, number of days the payment is overdue and its status.
As the report contains information about your credit and repayment history, it plays a key role in the credit institution’s evaluation process. It is therefore important to know what information is shared with the credit bureau.
Breakdown of the Credit Bureau Report
Now that we know what credit bureaus do, let’s do a page by page breakdown of the different sections on the credit bureau report. The breakdown done is for the credit bureau report
Credit Information Report Section
– This section is present on all the pages – at the very top.
– There are 6 fields mentioned inside this section. These are
- Name – The individual’s full name as per the credit institution records
- Member ID – It is the login number of the consumer
- Date – It is the date when the report was generated
- Time – It is the time of the day when the report was generated
- Member Reference Number – It is a unique number assigned to each individual
- Control Number – It is a unique number assigned to each report that is generated. This number is to be used while filing for error disputes.
Consumer Information Section
This section simply states the individual’s basic information such as
- Date of Birth
Credit Bureau Score Section
A 3-column tabular section, it houses the credit bureau score which is calculated from the credit repayment history of the individual.
Score Name – This name is used by the credit institutions to identify the credit bureau, that generates the report, e.g. CIBILTUSCR means CIBIL. Other bureaus are Equifax and Experian.
Score – It is a 3 digit number indicating the individual’s credit worthiness. There are 5 credit bureau ranges. They are:
- Score of 0 or -1- A credit score of 0, or less, means that you have no credit history.
- Score between 350 to 500 – This indicates either a default in past EMI payments or excess credit utilization on credit cards. Loan application will be rejected.
- Score between 550 to 650 – A score in this range, is acceptable. It indicates that you have been regular with your payments, and can be trusted for fresh credit. The chances of getting a loan approved are good.
- Score between 650 to 750 – This range indicates that you are doing well with your finances. You should stick to your financial habits, to maintain or improve your score. You have great chances of getting a loan approved.
- Score between 750 to 900 – This is considered as the best range. This clearly indicates that you have been regular with your EMI or credit card bill payments. You can avail a loan with ease.
Scoring Factor – This lists the reasons as to why a person has been given a good or bad score. This also indicates if the person has no credit history. Not having a credit history means the individual has never availed credit before. Banks, almost surely, would reject such an individual for a credit. Loan Singh, however, provides personal loan to individuals who do not have a credit history; but they have to be salaried for at least the 3 months prior to application.
This tabular section contains 4 columns, and helps verify your identity based on government related identity numbers.
ID Type – This mentions which IDs are registered with the credit bureau. These could be your Income Tax ID number, Passport number, Voter ID number, Driving License number, Ration Card number etc.
ID Number – This mentions the corresponding government numbers
Issue Date – This mentions the dates the IDs were issued by the government
Expiration Date – This mentions the expiry date for the mentioned government documents
It contains 3 fields in tabular form containing information such as
- Telephone Type – This could either be Office, Home or Mobile
- Telephone Number – The registered corresponding number
- Telephone Extension – Extensions of the numbers if any
Email Contact Section
This simply mentions the individual’s Corporate and Personal Email ID
It contains 2 fields displaying past and changed addresses. It contains the following fields.
Address – The address of the individual. Residential address and employer’s corporate address.
Category – Tells what type of address i.e. Corporate or Residential.
Personal/Inquiry Disputes Section
This section lists out any, or all, credit related disputes between an individual and the credit providers. It also lists the date of disputes along with relevant credit bureau remarks. It covers personal disputes and information under each dispute.
In case you find wrong information here, raise a dispute asking for corrections from the credit lending institution.
Employment Information Section
This section states the employment information of the individual. It shows the income earned in gross and net values. It also states the individual’s income in annual and monthly figures. It contains the following fields
- Account Type – The credit type applied for.
- Date Reported – The date the credit was applied
- Occupation – What does the individual do?
- Income – The gross monthly or annual income earned
Employment Information under Dispute Section
This section reports any dispute pertaining to the employment details. It states the nature of the dispute, the date the dispute was lodged, when it was recorded and the comments from the credit bureau. Any discrepancies found here should not be taken lightly. Credit institutions consider your employment history when determining your credit worthiness. The fields mentioned here are
- Error Reported Date
- Error Reported
- CIBIL Remarks
- CIBIL remark entry date
- Error dispute remarks entry date
- Dispute remarks
Account and Inquiry Summary Section
This section details your credit information, individually and all, details that pertain to your account. As you keep repaying, the changes are reflected in the updated credit bureau report.
This is the most important section, as all your credit accounts and their corresponding repayments are housed here. The newest credit accounts are mentioned first. It includes the total number of accounts, credit amount sanctioned, outstanding balance and overdue amount. The fields are
Accounts – Total, overdue, zero balance, credit card number, ownership of card, collateral value, collateral type
Amount – Found with High credit, current balance, overdue, EMI, credit limit, repayment tenure, interest rates
Advances – If any advance is taken
Balances – If the balance is current or overdue
Date Opened – If the account information is recent, oldest or as per last payment
Status – If the account is ‘Suit filed’, ‘willful default’, ‘No suit filed’, ‘Actual payment’, ‘settlement’, ‘written off/settled’, etc.
This section mentions the total number of inquiries made at different time periods. It indicates the date on which the most recent inquiry is made. There are 2 types of inquiries – Soft inquiry done by the individual, and Hard inquiry done by the credit lending institution to check your credit standing.
The higher the number of hard inquiries, the lower the chances for a credit approval.
- Enquiry purpose – The reasons for the inquiry
- Total – The total number of inquiries in all
- Past 30 days – How many inquiries in the past 30 days
- Past 12 months – How many inquiries in the past 12 months
- Past 24 months – How many inquiries in the past 24 months
- Recent – The most recent inquiry.
Days Past Due/Asset Classification Section
This section classifies the account and states the number of days the account is overdue. The asset classification is based on the following parameters.
- STD (Standard) – When payments are made within the standard 90 days
- SMA (Special Mention Account) – When payments are not entirely regular and account soon to be classified as substandard account
- SUB (Sub Standard) – When payments are made beyond the 90 days period
- DBT (Doubtful) – When the account is classified as substandard for one year and recovery becomes doubtful
- LSS (Loss) – When the recovery of dues is not possible and the account is treated as a loss by the credit institution.
If the account is overdue, the first row of this section will indicate the number of days past due (DPD) i.e. the number of days beyond the due-date. E.g. ‘000’ indicates no late payments
Credit Bureau Score
The credit bureau report houses a compiled score/rating known as a Credit Bureau Score. The score is a statistical indicator of an assessment done on your credit repayment capacity. The score has a minimum value of 300, and a maximum value of 900. The higher your credit bureau score, the better your chances of getting fresh credit from Loan Singh or any other lender.
A good credit bureau score indicates quite many things such as the timeliness of repayment, the quantum of credit you own, the nature of credit, and your overall performance while under debt. The bureau score is also a culmination of the number of times a hard inquiry was made by any lending institution. Credit institutions will not lend you credit, if you have had a history of defaults in your loan repayments. You can either be a major or a minor credit bureau defaulter. Minor defaults would include payments that were delayed, but cleared within a secondary due date.
Good Credit Bureau Score
You can ensure a good credit bureau score if you remember these helpful tips from us
Prompt On time payments
Make sure you do not delay when it comes to monthly EMI repayments towards your loan or credit card. Set up an auto debit feature wherein your loan EMI’s are debited from your account before the due-date.
Credit card limit
Keep your credit cards spending at a minimum – ensuring you do not spend over the limit. Pay-off your credit card balance in full each month.
Try to avoid too many hard inquiries
Too many inquiries within a short span of time can damage your credit bureau score.
Check for credit report errors
Make sure you do routine checks of your credit bureau report every 3 months. This way you know your credit bureau report is up-to-date with all the timely repayments well documented.