Basic Credit Information Report (CIR)
Equifax is one of the 3 main credit bureaus that are authorized by the RBI to operate in India. These bureaus issue credit ratings that help quicken the credit approval process and make it more transparent for both lenders and borrowers. You must have heard about the term “credit report” if you have been applying for credit cards or loan products. You might also have heard how important your credit report is to being approved. What exactly is this credit report? How do you read a credit report? Read on to know more.
The credit bureau collects and maintains information about individuals’ payments on their loans and credit cards, their credit limit, the age and number of their credit accounts and status of these accounts, among other data. Banks and non-banking financial companies (NBFCs) provide Equifax with this information on a periodic (usually monthly) basis. Equifax, and the other credit rating agencies, then subject this data to complex mathematical algorithms to arrive at your credit score.
What is a Credit Information Report?
A basic Credit Information Report (CIR) provides a complete view of your credit profile - when you have borrowed, where or from whom you have borrowed, how much you have borrowed, how many loan accounts you have, your repayment behaviour, etc. It gives prospective lenders a bird’s eye view of your credit behavior. Having a good Equifax credit score and healthy credit report is a direct reflection of how responsibly you use credit and helps lenders judge if you are at high risk for defaulting based on your past behaviour. The better your score, the better your chance of being approved for a credit card or loan.
What is its relevance?
A credit information report gives a detailed picture of your past and current credit health and behavior and throws light on your current liabilities, cash outflows and repayment capacity. Lenders get a comprehensive picture of your credit health and can more effectively evaluate your ability and willingness to fulfill your debt obligations.
It is also very important to have a credit history. Many people are under the mistaken impression that if they do not take any loans or credit cards, they have an advantage when applying for credit for the first time. This is not true. Lenders like to see a long prior credit history so they can better judge your track record rather than a short or non-existent history.
What does a Credit Information Report contain?
A Credit Information Report contains your personal and as well as detailed credit information. It helps lenders assess if a customer is at high risk of defaulting. The basic credit information report has five sections as described below:
Identification and Contact Section:
This section contains basic details like your name, date of birth, age, permanent address, identification information, etc. This way, lenders can confirm application information by cross checking the details.
This section offers a quick overview of your full credit profile.
The recent activity section—as the name suggests—throws light on the latest lines of credit you have secured and any change in the status of your accounts ( a newly delinquent account, for example). The information in this part of the report helps the lender quickly access your current credit activity and behavior with regard to your recent accounts.
Account Details Section:
This section lists both past and present credit accounts. It also contains details on your repayment history of each of those accounts. The lender gets an account-wise break-up of your repayment history. Lenders rely on the information present in this section in order to evaluate whether you are a high-risk or low-risk customer. Typically, if you have good, consistent payment behavior across all your loan accounts over a substantial time frame, it will be reflected in this section.
This section reflects how responsibly you have managed all your credit accounts. Lenders also look for information on the kinds of accounts you have chosen. For instance, having a combination of secured and unsecured credit denotes that you are able to manage both types of credit (provided, of course, you pay off your dues consistently).
Information as to how regularly you pay your dues, if you have made the repayments on time, or if you have missed, delayed or made a partial payment, whether you have defaulted or settled any account—all these details are listed here.
Did you know that every time you apply for credit of any kind—be it a personal loan or credit card—it results in a ‘hard’ inquiry on your credit report? This section gives the details of the number of inquiries made. If the number of inquiries is on the higher side, and without corresponding approvals, then the lender will know that you have applied for multiple source of credit, and you are viewed as being ‘hungry’ for credit. This could lead to rejection of your loan application.
What do you do in such cases? Simply do not apply for multiple loan products at the same time. Too many such inquires within a short time will only have a negative impact on your credit score because it implies that you need to apply to several sources at the same time to fulfill your spending needs. Apply only where you think you qualify and have the best chance of being approved.
Why should I access my credit report?
It is pretty easy to take your credit health for granted, given that you do not access your Credit Information Report as frequently or as easily as you look up your regular bank statements.
It is important to periodically obtain a copy of your credit report and remain updated on your credit health. Check it carefully for any kind of inconsistencies. Sometimes, a misrepresentation of your name, address or wrongly reported credit limits or outdated account status could cause your credit score to drop. It could even be a sign of ID theft and fraud. You could read your report in detail to identify your areas of strength and weakness, and work to improve your credit profile, if required.
A Credit Information Report can practically determine your financial life. When you apply for a loan or credit card, a lender typically first approaches the credit bureau to check your credit score and screen your credit report to check if you are creditworthy.
How do I access my Credit Information Report?
It is simple to access your Equifax Credit Information Report. You only need to fill the Credit Report Request Form and send it to the address mentioned on the Equifax website along with the requisite documents including ID proof, address proof and payment.
Alternatively, if you think you need help with accessing and understanding your credit report, and improving your credit score if required, CreditMantri can help you. You can approach CreditMantri will obtain your credit score at no cost to you, and offers a free credit health check to help you become loan-eligible.