Three things to look for in your CIBIL credit report

For most of us financial jargon is confusing. Our eyes tend to glaze over when reading bank statements and credit information reports. We tend to go straight to the bottom line – the credit score if it is a credit report you are reading. But what goes to form that credit score is equally important. While it will be good if you read the credit report in totality, here are three things you must not miss when you have your credit report in hand.

Lata Agarwal had been advised by her financial planner to check her credit report every year. Just like one would take a annual health check up to ensure all parameters are within the normal range and no red flags are popping up, so also one should check the CIBIL report annually i.e. do a financial annual check up. What Lata wanted to know is which are important parameters in a credit report that must be checked to ensure that her financial report card is healthy.

There are no reporting errors from the lender

You should check your CIBIL credit report at least once a year to make sure there are no errors that could keep you from getting credit or best available terms on a loan. You should also check your report before making a major purchase that would involve a loan, such as a house or a car.

While sending information to the credit bureau the lender or the bank could have made some errors in reporting your credit transactions. The first step is to find the errors by actually reading the report and not tossing it in a file after reading the credit score. When Lata got hold of her credit report and read it she saw it still showed an a outstanding amount of credit payment of a credit card which had expired and surrendered over 2 years ago. This wrong information was greatly responsible for lowering her CIBIL credit score. So if you find mistakes, the immediate action should be to fill out the dispute form for the credit reporting bureau. If the error is actually with the creditor who reported the account, you may also need to write a letter to the creditor or alternatively raise the dispute with Credit Bureau for correction.Maintaining a high credit score is essential to a healthy financial future.

The transactions in the credit report are all made by you (Hint: Your identity could be stolen)

Check your report for any credit applications/enquiries that have arisen there are not made by you.  For instance, if you see a couple of home loan application in your credit report that you have not made, it can be a sure sign of identity theft. Look out for signs of identity theft. Alerts for possible fraud include:

• Loan accounts that you have not opened
• Credit inquiries not made by you
• Any late payments or defaults that were not made by you
• Address and Identity information which are not yours
• Phone number reported which you have never used
• Incase you suspect an identity theft, immediately report any suspicious information or activity to the credit bureau that issued the credit report and to your banks too.

Account information

A large bulk of the information in the credit report is your account information – a list of your loans and credit card accounts. This is a good time to review your accounts. You can cross check the various accounts, the credit limit, current balance and payment history. Make a note of accounts that were closed or made inactive by the bank and those that have late payments or negative remarks associated with it. See which ones are active and if you would like to consolidate any of them, organise paperwork in the accounts and in general do the financial housekeeping we tend to postpone.

The author is Co-Founder & Director, CreditVidya