Kolkata based Swagata and Sagnik Chaudhary are a typical city based couple. They work hard and party harder, but have their priorities in place. Having been married for just about a couple of years now, they are planning to buy their first home soon. Fairly well read, this couple is aware of the fact that they must handle debt responsibly. However, they have not been able to put a finger on what exactly is the difference between their CIBIL score and the CIBIL report and how it may have a bearing on their home loan application when they make one.

Like the Chaudharys’, there may be a lot of others who may have heard of credit bureaus, but do not know how the information provided by such organisations may seal their fate when they intend to take a loan. For the benefit of the many like the Chaudhary couple, let us try to decode the credit score and credit report.

When you take any kind of loan from a bank or apply for a fresh credit card, your personal details, employment details and repayment track record are passed on by your bank to credit bureaus. There are three major credit bureaus in the country- CIBIL, Equifax and Experian. These organizations assign you a credit score. The parameters that are used to arrive at your credit score are:

• Age of accounts
• Status of accounts
• Outstanding balance
• Payment history

The scoring pattern for each credit bureau is different. CIBIL which is the most popular and the most referred to by banks has a score band of 300-900. Equifax has a score range of 1-999 and Experian 1-1000. The credit score can therefore be called a statistical comparison that your prospective bank will look at during your credit appraisal process before it decides whether you are loan worthy. Since most banks go to CIBIL to check out your credit score, its important for you to bear in mind that you must have a CIBIL score of 750 and above to qualify for a loan.

Once a bank is satisfied with your CIBIL score, it goes ahead and scrutinizes your CIBIL report. The following are what your CIBIL report contains-

• Your personal details- Name, age, gender, postal address and PAN number.
• Your employment information- This section contains information about your monthly or annual income as is available with the banks you have taken loans from. This information may not be updated to your latest income if you have changed your job or have been promoted recently.
• Your credit score- The score that has been assigned to you by the credit information bureau.
• Information on various loan accounts- Your CIBIL report will have a record of the types of loan you have availed of, the age of each of these loans and your repayment record on these. Any defaults, closure and pre-settlements if any are recorded too.
• The number of inquiries- Every time a bank accesses your report before giving you a loan or a credit card it accesses your credit report. Each of these inquiries are called “hard inquiries” and are recorded in your CIBIL report. Too many hard inquiries indicate that you are credit hungry and will therefore have a negative impact on your credit score.

To put in a nutshell, a credit score is an indication of your creditworthiness while a credit report is a detailed report of your financial health that banks are free to access if you apply for a loan. Now that you are clear about what goes into constituting your credit score and a credit report you must also know that it is of utmost importance to keep up an impeccable credit record. So if you intend to take a home loan or any other loan for that matter, make sure you maintain a good credit history.