While a credit report is critical to attest to your financial health, it is equally important for you to read and understand what your credit report shows. It is a milestone in building your financial future. Your credit report primarily contains all information about your credit cards and personal loans, including how timely you have been with the repayments.
Now, understanding your credit report is very important and can also be very useful. This is because financial institutions refer to your credit report to determine your eligibility before lending anything to you. Reading your credit report can also help you gain insight into the different aspects of your finance and work on how to improve your CIBIL score.
What comprises your credit report?
Before understanding your credit report, it’s important to know the different aspects of your report. Typically, a credit report consists of the following 5 pieces:
- Credit score
- Personal and account information
- Credit inquiries
These factors have to be well-read and understood to gain deep insight into your financial health.
How to read your credit report?
1. Credit score
The credit score, commonly called CIBIL score, is a 3three-digit number that gives you an overall picture of your creditworthiness. Typically the CIBIL score varies between 300 and 900. However, it is ideal for maintaining your CIBIL score above 750. Here’s a list of ranges and what they mean:
- 750 and above – If your CIBIL score is in this range, it is considered excellent. You will get easy approval for personal loans and any other forms of credit without any hassle.
- 700 to 749 – This range of CIBIL score is considered to be good. You will still be eligible for personal loans and credit. But you may have to improve your CIBIL score if you’re looking to avail a personal loan with a lower rate of interest.
- 650 to 699 – This is an average range of CIBIL score. You may get approved for personal loans only under favorable conditions.
- 550 to 649 – Having a CIBIL score in this range is not credible. Unless you provide collateral, you will not be eligible for a personal loan or any credit.
- Below 550 – If your civil score is in this range, you will need to work on how to increase CIBIL score as financial institutions consider it a risk to lend money to an individual with this score.
2. Personal and account information
Beyond your CIBIL score, you will have your personal details such as your name, PAN number, passport number, etc. In addition, your account information like your credit limit, payment history, and more will be mentioned. Ensure to verify these details.
3. Credit Inquiries
This part of your credit report mentions the inquiries made by banks and other FIIs on your type of loan and further details.
Understanding your credit report is very important. Finserv MARKETS can help you understand what your credit score means and how you can check them. To check your credit scores, you can utilize CIBIL’s website and get your credit report with the help of your PAN card as well. Finserv MARKETS ensures to provide you with the right knowledge so that you can improve your financial health.