Enhanced Credit Information Report
You have decided to buy your dream car, having put months of the research on the net and going around to showrooms to go on test drives. Finally—the time has come! You apply for car loan. Now comes the shocker—you are turned down, deemed unqualified for a loan because of your credit score. Such a scenario happens every day. It is essential to access your credit report once in a while to check your credit health and make sure there are no nasty surprises when you apply for a loan. Read on to learn what goes into a credit information report, who collates the information that goes into a credit report, and how your credit score is computed.
Equifax is a credit information company licensed by the Reserve Bank of India to aggregate data to issue credit ratings or credit scores that help quicken the credit approval process. It has banks, NBFCs and other financial institutions as its members and is one of the 3 main credit bureaus that are authorized by the RBI to operate in India.
Credit bureaus inform banks whether a prospective borrower is creditworthy or not based on his past payment track record. This is achieved by collecting information about individuals’ payments on their loan accounts and credit cards, their total credit limit, the age and number of their credit accounts, status of these accounts (whether settled, closed or delinquent), among other data. Banks and non-banking financial companies (NBFCs) provide all the three credit information companies with this information on a periodic basis.
Equifax, and the other credit bureaus, then subject this data to advanced statistical analysis to calculate your credit score. Each bureau has different parameters when calculating a credit score, so keep in mind that your credit score will not be exactly the same across all three bureaus.
Besides providing a Credit Information Report (CIR), Equifax also provides borrowers and lenders with Enhanced Credit Information Reports.
What is an Enhanced Credit Information Report?
An enhanced credit information report is typically a more visually detailed format of the basic credit information report. It contains graphs and charts and gives the reader a quick understanding of the customer’s credit utilization, credit mix and delinquency trend – all of which helps lenders understand the credit behaviour of the customer at a glance.
An enhanced credit information report provides a quick snapshot of the credit profile of a customer, with the help of graphics. It provides illustrations detailing the available credit, utilization trend, distribution of credit, number of accounts, type of accounts, repayment behavior and overall credit performance of the customer. This kind of enhanced report especially helps those who are involved in manual underwriting.
Features of an Enhanced Credit Information Report:
Typically, a credit information report will contain the following:
Your Identification and Contact details:
This helps lenders confirm application information by cross checking the details. Your basic details like your name, date of birth, age, permanent address, ID information, etc. are listed
This section has information about all the lines of credits you have. It offers a quick overview of your complete credit profile.
This section throws light on the latest lines of credit you have acquired and any change in the status of your accounts. The graphical illustration present in this part of the report helps the lender quickly access your current credit behavior and activity.
Account Details Section:
Perhaps the most comprehensive of all sections is the accounts details section. This section lists both past and present credit accounts. It also has data on your repayment history of each of those accounts. The lender gets an account-wise break-up of your repayment history.
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. If, for instance, you are having a mix of secured and unsecured credit, it denotes that you have experience in managing both types of credit (provided, of course, you pay off your dues diligently).
Did you know that every time you apply for a line of credit, it results in a ‘hard’ inquiry on your credit report? This section of the report gives the details on the number of inquiries made. Keep in mind that if the number of inquiries is on the higher side, then you might be rejected for a loan or credit card, as it shows that you are desperate for credit and are applying simultaneously at different places in order to satisfy your credit needs. If the number of inquiries is high - and without corresponding approvals - it 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 has a negative impact on your credit score. Apply only where you think you qualify and have the best chance of being approved. It is better to have a look at your credit history and work on your credit score if it is low, to increase your chances of being approved for a loan product.
When should I access my credit report?
It is vitally important to remain updated on your credit score. You should access your credit report periodically (perhaps once a year) to check your credit health, just as you would check your physical health. Do not just view your credit report right before applying for a loan - if you have a low score you might not have enough time to improve your score before applying and run the risk of being rejected or being offered unfavorable terms and conditions, including high interest rates. This could slow down your financial plans and might throw you off track especially if you are in need of urgent credit.
Obtain your CIR and check 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 go for a toss. Misrepresentation of your credit information could even indicate ID theft and fraud. You could read your report in detail and work to improve on your credit profile and rating, if it is needed. Given the hectic lifestyle everyone leads today it could be very easy to take your credit health for granted and ignore it till it is too late.
How do I access my Equifax Credit Information Report?
Contrary to the popular belief, you can check your CIR on your own. It is simple to access your Equifax Credit Information Report. You just 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. CreditMantri provides online analysis and practical recommendations to help you improve your credit health and your score, if required. It will also obtain your credit score at no cost to you, and offers a free credit health check to help you become loan-eligible.