Does Credit Report hold any Significance in my Life?

1. Does Credit Report hold any Significance in my Life? If it was the 1990s, credit report wouldn’t have any significance. But from 2000 onwards - this was when TransUnion CIBIL came into existence - without a credit report there is no approval to any kind of financial product that you’ll like to avail. Like TransUnion CIBIL, there are some other credit information companies that provide credit scores and report to individuals and institutions. These reports are formulated on the basis of the debt repayment record of both individuals and institutions. Looking at these reports, banks and NBFCs (Non-Banking Financial & Institutions), evaluate your credit profile and then only disburse the loan amount. What are the Constituents of Credit Report? The format of ​credit report​ may differ for different credit information companies. Like, a report provided by CIBIL will have a different format as compared to the one by Experian. But, the constituents of both the credit reports will be the same, more or less. Credit reports are issued to individuals and corporation on a month-on-month basis. It has a record of all the past loans and credit cards you’ve taken and how you’ve serviced it. Also tell the composition of secured versus unsecured credit. Most importantly, it points out your credit behaviour - whether you’re making timely payments or not, current status of your loan account, settlement of credit card bills and more. After a thorough evaluation of all these factors, a credit score is provided to you. What is a Credit Score? Credit Score is a numerical representation of your credit behaviour. It is a three digit number, which ranges between 300-900. Here, 300 represents a very bad score and 900 is considered to be the best score. However, if your credit score lies anywhere between 700-900, you’re good to go. A score of more than 700 is considered to be a good credit. TransUnion CIBIL score provides ​credit CIBIL score​ to individuals. It is absolutely necessary to state here that the scores given by CIBIL is widely accepted in India. Reason being 80-90% of the banks and other lending institutions accept credit CIBIL score. How to Maintain a Good Credit Report? Servicing your Debt on Time: ​When you’ve taken a debt, servicing it on time should be on your top-priority list. Revamp your spending pattern - only focus on pressing needs rather than concentrating on luxury. This will help you procure other lending

2. products better and easier. When you pay off EMIs on time, your credit ​CIBIL​ score gets a lift by a considerable amount. You might get concession on some of that lengthy documentation procedure. Check on your Credit Card Limits: ​It is necessary to control your credit card limit. Excessive spending is okay but not to a point where it affects your credit report. An increased credit card due balance can adversely affect your credit score. Avoiding one payment won’t affect your credit score. But, a consistent ignorance of payment can affect your credit report considerably. Maintaining a healthy mix of Credit: ​Having a home loan or auto loan on your credit profile is a plus factor for your credit report. Secured loans are considered to be a less expensive form of credit than unsecured loans. So more the number of unsecured loans (like personal loans), more will be the payment burden on you, and hence, more pressure for you to maintain a good credit CIBIL score.