A credit report is a detailed account of a person’s credit history. The credit report will include details of your credit accounts, like, credit cards, auto loans, home loans and any other form of credit availed from a registered lender. The credit report will also include details like payment history, credit limit and account balance, opening date of credit, status of loans (close or open, paid in full, not paid in full). The report will also include new credit inquiries, collection records and public records, for cases in which an individual has filed for bankruptcy or a tax lien.
A credit report can seem like quite an intimidating document to read, but listed below is a section-wise breakdown of how a person should read his/her credit report:
1. Personal Information
This section of the credit report will contain information pertaining to the individual’s identity, such as, the person’s name, address, current and previous accounts, date of birth, etc. An individual should check the details provided under this section, if there is an incorrect address in the report or the person’s name has been misspelled, he/she should report this to the Credit Rating Agency (CRA) as this could be a sign of wrong data being reflected in the report or credit fraud.
2. Account Information
This section of the credit report will carry information pertaining to the person’s present and past credit account. The individual should check the details of this section carefully as this is quite a detailed section. The following details should be checked:
- Date of opening
- Name of creditor
- Current balance
- Highest balance/credit limit
- Monthly payment history
- Account type (Instalment, revolving, open)
- Account ownership (Individual or joint)
- Payment status
The individual should check the details in this section to verify that they are accurate. The balance reflected in various accounts are on the statement date, this can be a little confusing, as it may reflect a balance even if the individual has paid off in full or may show account that were closed prior to receiving the Credit Report.
3. Public Records
This section of the Credit Report will list and bankruptcies filed by the individual, tax liens availed by the individual or collection accounts. The dates provided in this section should be checked as they will directly affect how long they will appear on an individual’s credit report and affect the person’s credit score.
4. Inquiries
This section carries data pertaining to any inquiries made by companies regarding an individual’s credit score. If an individual applies for multiple lines of credit, this could affect his/her score negatively. In most cases inquiries do not affect a person’s credit score, as they are soft inquiries by lenders for promotional purposes. A soft inquiry is generated when the request for the credit report is not related to the individual’s request for credit.
FAQs on How to Read a Credit Report
- What do numbers mean in a credit report?
- What are the three signs of credit problems?
- What are the five things found on credit report?
- What is the most common information on your credit report?
- What are the 5 C's in credit evaluation?
- What are the three common mistakes in credit reports?
- What are the seven actions that can improve your credit score?
- What are 5 things not in your credit score?
Credit score is divided into various scoring models which decide the credit limit of the customer. The scoring model is divided into 300-579; 580-669; 670-739; and 740-799 which is considered as ‘poor’, ‘fair’, ‘good’, and ‘very good.
The three major signs of credit problems occur when there are several debt payments, rejected application of loan, and closure or rejection of credit card.
The five important things found on credit reports are payment history, length of credit history, amount the card user owes, types of credit used, and new credit applied for.
The most common information on credit reports is the payment history which makes up for 35% OF THE FICO score.
The five Cs in the credit report that lender considers for determining the score of the user’s loan application are Capacity, Capital, Conditions, Character, and Collateral.
The three common mistakes in credit reports are mistaken account details, incorrect personal information, and account reporting errors.
Seven significant actions that can help you improve your credit score are keeping a copy of the credit report; clearing credit card dues on time; avoid applying for new credit cards; reduce the balance on the credit cards; paying off bills on time; consult a credit counselor; and do not paid-off or unused accounts.
The five things that are not in the credit report of an individual are religion, race, marital status, sex, and national origin, which is strictly prohibited from being used by the lender as per the Consumer Credit Protection Act.
TransUnion CIBIL is one of the leading credit information companies in India. The company maintains one of the largest collections of consumer credit information in the world. CIBIL Score plays a key role in the lives of consumers. Banks and other lenders check the CIBIL Score of the applicants before approving their loan or credit card application. Consumers can visit the official website of CIBIL to check their CIBIL Score and Report.
