Introduction
“Sorry, we won’t be able to process your loan application because your credit score is too low.” As a person who has availed loans before, I can testify to how much this single statement can hurt. Especially when there is a pressing need of funds, and you know that the low credit scores are mostly your own folly. Banks and non-banking financial institutions do not take any pleasure in harming your credit score on purpose. Delays in payments, improper follow-up, willful defaults are just some of the culprits that lead to a bad credit score and report.
We’ll help you know what your credit report is, how to read and understand it and some tips on improving your credit score faster.
Credit Bureau, Credit Scores and Credit Reports at a Glance
I’m sure most of you would be familiar with the term ‘CIBIL Score’. CIBIL is one of the four institutions in India that collect and compile credit information of individuals and business entities from across the nation. Along with Credit Information Bureau of India Limited (CIBIL), Equifax, Experian and CRIF High Mark are the Credit Information Companies that deal with credit data in India. CIBIL is by far the oldest and the most popular, having its origins in the year 2000. Experian has been in existence since 2006 and achieved a license of operation in 2010. Highmark and Equifax also received operating licenses in 2010.
Lending, be it for personal, business or residential purposes, is always laden with risk. Credit Information Companies provide the data to lenders that helps them take a rather calculated risk instead of a blind one. Based on how a business has been performing financially or how a person’s bank records are, credit scores are given by these agencies within a range specific to each of them. A small comparative chart of the same is shown below –
|
CIBIL |
Equifax |
Experian |
CRIF High Mark |
| Score Range |
300 to 900.
900 the best
300 the worst |
1 to 999.
999 the best
1 the worst |
300 to 900.
900 the best
300 the worst |
300 to 850.
850 the best
300 the worst |
| Good Credit Score Threshold |
700 and above |
650 and above |
700 and above |
720 and above |
| Poor Credit Score Threshold |
600 and below |
500 and below |
600 and below |
640 and below |
The good and bad thresholds are the trends that are followed by most banks and/or NBFCs when deciding to issue loans or credit cards. There might be institutions who can define their own set of credit scores that they consider good or bad. This is just a general idea. You might notice there are gaps of quite some values in between the good and bad score thresholds. These are the popular ‘gray’ areas.
If your credit score falls in these gray areas, it is mostly up to the lender whether to approve or reject a loan or credit card. There are some people for whom the CIBIL TransUnion score would be in negative or in single units. In such cases, mostly the person has never had any loan or credit facility ever. For them, most lenders do quite a few background checks, but if everything is fine, loans and credit card approvals are not far away.
Credit scores are just a summary whereas credit reports are the more important reports that you should be keeping an eye out for. These reports deal with extensive information and need to be read carefully. Every loan you have ever availed, and every credit card you have used is listed in here, along with the payment delays, delinquency status and status of the credit instrument. Sometimes, there might be inconsistencies in these records and based on the same, you can even file a dispute with the respective credit bureau. Based on the validity of the dispute claim, they will get in touch with your lender and sort out the problems in your report.
Each bureau takes a certain amount of time to generate your report. Every report generated comes with an associated amount of fees. The following table gives a general overview of the rates and time taken by these bureaus for generating credit reports. Additional services offered by the bureaus is also mentioned in the table –
|
CIBIL |
Equifax |
Experian |
CRIF High Mark |
| Services |
For Individuals –
CIBIL TransUnion Score
Credit Information Report
Market Insights
For Companies –
Portfolio Review Reports
CIBIL Company Credit Information Report
CIBIL Bureau Analyzer
Extra services –
Portfolio Management
Fraud Prevention
Customer Acquisition
Custom Solutions
|
For Individuals –
Equifax Credit Information Report
Equifax Alerts
Equifax Portfolio Review
Equifax Risk Score
For Companies –
Credit Risk and Fraud Management
Portfolio Management
Industry Diagnostics
|
For Individuals –
Experian Credit Information Report
For Companies –
Customer Acquisition
Collection and Money Recovery
Customer Management
Data and Analytics
Customer Targeting and Engagement
|
For Individuals –
CRIF High Mark Credit Report
Portfolio Management
Alerts
Geo Analytics Consulting
For Companies –
CRIF High Mark Credit Report
PERFORM Score
Portfolio Management
Extra services –
Verification
Data Quality Management
Credit Assist
|
| ETA for Credit Report |
5 minutes for CIR
7 days for Detailed Report |
10 days |
5 minutes for paid CIR
3 days for free CIR |
5 minutes for paid CIR
3 days for free CIR |
| Fees |
Free once a year INR 500
INR 800
INR 1200
based on subscription
|
INR 400 |
Free
INR 399 for detailed report instantly |
Free
INR 399 for detailed report instantly |
When to Use What
Normally, getting a credit report and score from any one bureau should work for any individual or company. If you are running a small business, it is advisable to get separate reports for yourself and your business from at least two bureaus every 6 months. These reports will also have varying credit scores depending upon the usage and repayment of your loans/credit cards and EMIs/bills respectively.
That way, you can easily keep track of what problem areas are in the reports that can be fixed. Often, sometimes rectifying incorrect data in the reported information can go a long way in increasing credit scores. In all the bureaus, you will need at least one government-issued identity proof and acceptable address proof to raise a dispute. If you have multiple credit cards or multiple loan accounts, it can be a bit tough to keep up with the process of CRIF High Mark. Experian and CIBIL do not require as many multiple checks to show you the credit report and the corresponding credit scores.
With a basic overview of credit scores here, we are presenting you some links where you can access an annual free credit report from some of these bureaus –
- Free CIBIL Report (Once a year) – https://www.cibil.com/freecibilscore
- Paid Equifax Score and Credit Report – http://www.equifax.co.in/consumer/forms/credit_report/en_in
- Free Experian Report – http://www.experian.in/consumer/experian-free-credit-report.html
- CRIF High Mark Report – https://cir.crifhighmark.com/Inquiry/B2C/B2CommercialPortal.action
Did you find something in your reports that you don’t remember? While you can raise a dispute any time, it is better to be safe in the future. Perfios is a money manager that can track any financial account for you and is free for individual users and can include small businessmen effectively. Do check it out!
If there’s something in your credit report that you don’t quite understand, read our next article to get an insight into how to read the more complex reports from bureaus.
