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What is a Credit Report?

A credit report (also known as a credit information report, credit file or credit history) is a detailed record of a person’s credit accounts, including credit cards and loans. It provides any potential lenders with information on your payment history, current and past credit mix, and how you have been managing your credit.

This report is then used to calculate the individual’s credit score. Together, the credit report and the credit score are used by lenders to determine whether they will approve your requests for loans and credit.

In India, there are four credit information bureaus that maintain these credit reports – TransUnion CIBIL, Experian, CRIF High Mark, and Equifax. These bureaus get information about your financial history from your banks, lenders, and other creditors.

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Why is your Credit Report Important?

Since a credit report is essentially a summary of how a person has been handling their credit accounts, it is an important document. Credit reports are used by potential lenders and creditors to help decide if they will approve your applications for credit — and can also set whether or not you get favourable terms.

Your credit reports may also be viewed by others, such as for insurance purposes. Thus, it is important to check your credit reports regularly. This way, you can ensure that the information there is accurate and complete.

How to Get Your Credit Report?

While you can check your credit score at any time, the Reserve Bank of India has mandated that all the four licensed credit information companies provide you with one free credit report every 12 months. If you wish to check your credit reports more frequently, you can opt for additional paid reports.

Here is how you can check your credit report:

Step 1: Go to one of the four credit bureau’s websites, such as CIBIL, Experian, CRIF Highmark, or Equifax.
Step 2: Click on the “Free Credit Report” option.
Step 3: Enter your details to log in, such as your name, mobile number, and email address.
Step 4: You will be asked to verify your identity using your date of birth, residential address, and a government-approved ID card (PAN card, passport, driving license, voter ID, etc.)
Step 5: Once this information is verified, you may be asked a few further questions about your credit history.
Step 6: If you are getting a paid credit report, then pay the required fee through either NEFT or enclose a demand draft for the required amount.
Step 7: Submit the form through the website itself, or through courier, post, or email.
Step 8: Once authenticated, your complete credit report will be delivered to your registered email address, or physical address.

What Information is Included in your Credit Report?

A person’s credit report is made up using data shared to the credit bureaus by various banks and financial institutions about their credit related activity like repayment records, credit card usage, previous application for loans or credit cards, etc. This is then compiled into one comprehensive document.

In general, a credit report includes the following information.

Identification and Contact Information

This section contains:

Personal information: Your name, date of birth, gender and KYC.
Contact information: Your address (and past addresses) and contact numbers.
Employment information: Your monthly or annual income, as provided by banks and financial institutions.

Credit Score

This is a three-digit number between 300-900 which is calculated on the basis of your credit history.

Credit Summary

Includes your important credit information, such as the amount of credit owed (i.e. the number and amounts of credit cards and loans taken), types of credit, and how the credit is managed.

Recent Activity

This includes information like whether you have recently applied for a new account or secured new credit. Additionally, it will also feature any accounts that have been closed and more.

Account Details

Details of your account numbers and types, current balance and an account-wise monthly record of your payments. It will also feature whether these payments were made on time, delayed, or missed.

Inquiries

This section has details on the number of credit inquiries that are made. Each time you apply for credit, like a loan or credit card, a “hard inquiry” is placed on your credit report. A higher number of inquiries suggests that you are unable to manage your credit efficiently.

What do Lenders Look at on your Credit Report?

As mentioned above, potential lenders look at your credit report to determine whether they will approve your requests for loans and credit. While there are no universal rules which every lender uses to judge potential borrowers, here are some of the factors they will consider:

Credit score: The first impression any potential lender will have is your credit score, as it shows them the probability that you might default on the loan. This is why it is very important to have a good credit score (i.e. above 700).
Repayment history: One of the main factors that lenders consider is your track record of making on-time payments. They also look out for overdue payments (both past and present) as well as any one-time settlements resorted to for loans.
How much you owe: This includes the number, and types of loans and credit cards you have. Generally, having more loans will tend to reduce your repayment capacity for a new loan.
Dependency on credit: Lenders also watch out for “credit-hungry behaviour”, or a high dependency on credit. This includes applying for many loans or credit cards in a short period of time, and high credit utilization.
Personal details: Lenders might also consider your employment and residential history to ascertain your financial situation and its stability.

In general, if you display a long track record of responsible credit usage, you will be considered a low risk by lenders and are more likely to get approved for credit and get better deals.

A person’s credit report is a summary of their credit activity. This includes how much they owe, how often they pay their bills on time, and how long they have been responsibly managing their credit accounts.

This report is used to calculate the individual’s credit score, and together they are used by lenders to estimate their ability as a borrower to pay back debts, credit cards, or loans, i.e., their “credit risk”. Thus, it is important to maintain a good credit history so that one can access these credit opportunities whenever needed.

Frequently Asked Questions

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What is the difference between a credit score and a credit report?

A credit score is a three-digit number between 300-900 which depicts the creditworthiness of an individual. However, a credit report (also known as a Credit Information Report or CIR) is a more detailed breakdown of their credit history.

How often is your credit report updated?

Usually, lenders, banks, and other creditors will forward your information to the credit bureaus on a monthly basis (however, the day of the month that they send it may vary). Thus, depending on when your creditors send across your payment history, your credit report will usually be updated on a monthly basis.

How often can you check your credit report?

The RBI has made it mandatory for individuals to be able to access a single free credit report every 12 months from each credit bureau.

The minimum recommended frequency is for you to check your credit report at least once a year, though checking it every quarter is better. However, if you have more frequent credit activity, you can check it more often.

Note that accessing your credit report yourself is known as a “soft inquiry” and will not affect your credit report or score.

How important is it to check your credit score regularly?

If you regularly use credit accounts (like credit cards, or loans), it is important to check your credit report and your credit score on a regular basis. Knowing what your credit score is can help you make big purchase decisions, and can also help you ensure that your credit score stays high.

Additionally, if there are any errors or information that needs to be updated on your credit report, you can identify them soon and get them rectified.

What kind of mistakes might there be on your credit report?

Some common errors that might come up on your credit report are:

Old information: Outdated personal information, like addresses, contact numbers, etc.
Wrong account information: Wrong account number, wrong payment history, or other details.
Account errors: Accounts under your name have been missed out, or a wrong account belonging to someone else has been added. This can lead to misinterpreted reports or mistaken identity.
Clerical errors: Mistakes in your date of birth, address, contact number etc. can also lead to an identity crisis.

It is very important to rectify these mistakes as soon as possible, using the provided Dispute Resolution Form, as they can impact your credit score, and in the worst cases, can lead to mistaken identity and identity theft, which can be a serious issue, if left unresolved.

How to correct mistakes on your credit report?

If you find a problem or mistake on your credit report, follow these steps to get the issue resolved:

Step 1: Regularly monitor your credit report and identify errors.

Step 2: Once identified, report the mistake to the relevant authority. For example, if the error was on a financial institution, they need to rectify it before the credit bureau can make changes.

Step 3: If the relevant person has not made changes within 30 days of it being reported, you can approach an ombudsman (or government official) to get the errors rectified.

Step 4: Once the changes have been implemented (or if it is not possible to rectify the errors), the credit bureau will intimate you about the same.

You can find the dispute forms for reporting the error here: CIBIL, Experian, CRIF Highmark, or Equifax.