5 key things to note when reviewing your credit report
- Credit bureaus (CRAs) collect and hold information for your credit reports
- It is important to regularly check your credit reports to make sure that your personal and financial information is correct.
- To keep control of your finances, you can get free credit reports online nowadays.
New Delhi: Banks and other financial institutions assess the creditworthiness of loan and credit card applicants based on information from their credit reports. Lenders use this information to set the loan interest rate, loan amount, etc. The best way to understand your credit eligibility and position is to check your credit report and credit score frequently. Frequent review of your credit report would help you identify inaccurate information, which could lower your credit score.
Here’s what you should take a close look at when going through your credit report:
Credit Accounts: Your active and recently closed credit accounts are listed in this section of the credit report. Lenders pay special attention to this information when assessing your creditworthiness. Therefore, you need to make sure that your loan and credit card account details are updated and recorded accurately on the credit report. Any incorrect information or errors can adversely affect your credit score and negatively impact your eligibility for your loan and credit card.
Refund history: This section lists the payment history of your loan IMEs and credit card bills. It also gives details of which months payments were made by the due date and which ones were missed or delayed. The information in this section can be used by lenders to assess and predict your credit repayment behavior. You should read this section carefully to verify if the repayment history has been correctly listed and updated on your credit report.
Personal details: This section displays your personal information, including your name, PAN, cell phone number, communication address, etc. When lenders check your credit report when evaluating your loan or credit card application, any discrepancy between the information listed on your credit report and what is mentioned on your credit application can reduce your chances of getting credit. ‘get your loan approved or get a credit card.
Credit utilization rate (CUR): This is one of the most crucial parameters taken into account by the credit bureaus when calculating your credit score. For the unpaid, the CUR is the ratio of the total credit limit you are using. Banks prefer to lend to those with a credit utilization rate of less than 30% because this shows them that you don’t often rely on credit. Those who frequently exceed this mark of 30 should ideally ask their credit card issuer to increase their credit limit or apply for a different credit card so that their CUR is contained, as long as they do not increase their credit cards. card spending.
Credit Report Requests: In this section, searches of your credit report initiated by the lender are listed. Depending on the office, this section lists the name of the lender, date of application, type of credit facility requested, etc. Most lenders check your credit report with the bureaus every time you apply for a loan or credit card. Such requests initiated by the lender are called “serious inquiries,” each of which is listed on your credit report.
Remember that these inquiries can even lower your credit score by a few points. When a person applies for loans from multiple banks, the same is reflected in the CIBIL report and the credit score takes a hit and the potential lender may not agree to approve the loan. In addition, once an application is rejected by a bank, the credit rating drops further, making it even more difficult to obtain the loan when it is needed most. So, avoid making this mistake.
It should be added that you should make a habit of checking your report at regular intervals, at least once every three months. Nowadays, you may be able to get a free credit report every year from each of the four credit bureaus. You can also access free credit reports with monthly refresh through online financial marketplaces. If you see any inaccurate or incomplete information listed on your credit report, immediately report it to the appropriate credit bureau or lender for correction.