Why You Should Read Your Credit Report?

Credit report refers to the complete evaluation of your financial situation. CIBIL or the Credit Information Bureau India Limited generates a 3- digit score, depending on the financial history of an individual. Let us check out besides knowing the credit history, why it is important to go through the complete report.

Easy loan approval

The importance of credit report lies in the fact that it is one of the key factors when applying for a loan. Be it a Home loan, personal loan or a business loan, credit score is considered by financial institutions when approving the loan. A score above 700 is considered outstanding, while a score below 300 is extremely low and generally represents defaulters. Hence, it is advisable that you read through your credit report before applying for a loan.

Fix the errors

This is the next primary reason why one should read the credit report if one wishes to avail a personal loan. Any erroneous or missing information can adversely impact the score. Hence, read the credit report at least twice a year, revise and rectify details, if needed.information which should be revised include listed accounts, account status, and credit utilization ratio. A downtick on the credit score might also mean higher interest rates.

Be aware of thefts

Identity theft is quite common thing these days. Importance of credit report reading helps the account holder identify if there is an invalid or unknown account listed against your name. Misspellings, incorrect names of employers and address details can be a sign of identity theft.

Amend negative credit history

Besides personal and account details, credit report also contains details of companies who checked your credit score. Multiple credit checks might also create a negative impression in front of lenders. So in case, there are irrelevant company names mentioned in the report, the same should be amended.

Get real estate properties

If you are getting a high-value property on rent, the landlord might check the credit score. After all, he/ she does not want to put the money on the stake by renting the space to a person with an unstable credit history. So, the importance of a credit report is, it helps you to identify the mistakes and boost the credit score.

Besides the score, the rating also has other important details which an individual should know. The report has 4 parts which contain,

  • Personal details: Name, address and employer details.
  • Accounts: Credit accounts like credit cards, mortgage loans, collections, and automobile loans.
  • Inquiries: Company names and the dates for the latest 25 months on which the credit report was pulled up.
  • Public Records: Record about bankruptcy and civil judgments on the individual.

An annual credit report is around 100 pages long and each page has crucial information for the lenders and borrowers. Needless to say, it is imperative to go through your credit report especially before you plan on taking a loan.

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