Everything you Should Know About Credit Reports

Banks receive a great number of loan applications on a weekly basis. However, they have to assess each one of these carefully to minimize the risks. This is where a credit report comes in.

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What is a credit report?

A credit report contains the financial details (credit usage mainly) of a particular individual. There are several credit bureaus in India that create and maintain the credit reports of every credit user in India.

The most popular credit bureaus of India are:

• CIBIL

• Equifax

• Experian

• CRIF High Mark

How is a credit report used?

A credit report helps a lender such as a bank or an NBFC to evaluate a loan applicant’s creditworthiness. In other words, it helps them get a better idea of how responsible a loan applicant is with their credit usage. This can be easily determined by the credit score of that individual.

What’s a credit score?

A credit score is a direct representation of the creditworthiness of a particular credit user. For instance, CIBIL scores the credit users on a scale of 300 to 900. Thus, if a person has a credit score higher than 750, then they are considered to have a high creditworthiness. So, lending a personal loan or home loan to them will be less risky.

Lenders usually also check other details of the credit report when evaluating loan applications. For instance, the loan payment history, pending debt, etc. which are provided in the credit report can also inform the lender about the profile quality of an applicant.