Whenever you apply for a loan, the institution that will evaluate you before forwarding the loan will check your credit score.
A credit score is the numerical representation of your creditworthiness. The score clearly shows your past credit history and your credit behavior. The repayment habits you have displayed in the past get reflected and evaluated. The CIBIL score is a three-digit number ranging from 300 to 900. The closer you get to 900, the better your chances of getting loans faster with the best terms.
The credit score depends on the information available in the “Accounts” and “Enquiries” sections of the CIBIL Report. All your existing loan accounts, credit cards, and repayments are recorded in this report.
What is a CIBIL Report?
The CIBIL Report is a comprehensive credit report. You need to be aware of the contents of the CIBIL Report as any lender would be referring to the CIBIL Report, along with the CIBIL score, to evaluate your loan application. The CIBIL Report has two broad sections – Account Information and Enquiry Information. Let us have a look at these two sections in detail below:
- Personal Specifics –
This segment comprises your name, account number, and account type (whether a credit card or personal loan). The account holder’s name will also be shown as the account owner. Other information available here are the dates of account opening and closing. Additionally, the date on which the details were provided to CIBIL is also available.
- Account Specifics –
This segment comprises details like your name, account number and account type (whether it is a credit card or personal loan). The name of the account holder will also be shown as the account owner. Other information that is available here is the dates of account opening and closing. Additionally, the date on which the details were provided to CIBIL is also available.
- Status of Your Accounts –
This area of the CIBIL Report shows the current status of your account. There may be a situation where you have gone for a “settlement” with your lender. This means you have squared off the outstanding by making a partial payment, which has been mutually agreed upon between you and your financier. Another situation could be where the lender has “Written Off” the outstanding from their books. That happens if the payments remain outstanding for more than 180 days.
In addition to the above, the information available in this section is called Days Past Due (DPD). The number of days by which the repayment has been delayed is indicated for every loan or credit availed.
This segment provides records of all the loan applications that you have made in the past. Whenever you make an enquiry for any loan, the financial institution sends a request on your credit from CIBIL. The score check will be done based on findings from the report. If it is found that you have made a number of enquiries in a short period of time, it throws caution to the wind. It clearly shows that you are in the habit of taking loans, which might cause you to fall into a debt trap, and an over-exposure may finally lead to delinquency.
As a potential borrower, you must service your loans on time. You must make the credit card payments within the due date. Any untoward incident on your repayment will hamper your credit rating. There are online tools available to ascertain credit scores, do credit score check, evaluate yourself and report in case of anomalies so that your records remain clean.