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What is Credit Information Report and How to Improve and Maintain Better Credit Score?

A Credit Information Report (CIR) plays a very important role in deciding upon the creditworthiness of the borrower. The CIR plays a key role in the lender’s decision while applying for a loan. The report contains past repayment performance as reported by various member lenders about an individual to Credit Information Companies. Whenever you apply for a loan, the lender asks about the earlier dues paid on time. The Credit Score (CIBIL) and Credit Information Report (CIR) are measures of your creditworthiness.
Many times the credit report has errors which can lead to rejection of application or loan being sanctioned at higher rates. Having a recent CIR attached to your loan application increases the chances of it being picked up for processing quickly. Loans are approved for individuals with a score of more than 750 (range 300-900).

Some of the Do’s to Improve and Maintain a Better Credit Score

  • Always remember to clear your dues on time whether credit card or loan (personal, housing or consumer loan)
  • Always take care that, after a credit card dues or loan is settled, the next Credit Information reports (CIRs) reflect the same
  • Always have a balanced mix of secured and unsecured loans
  • Beware of fluctuations in income & low balance in the banks at the end of the month. Low balance can lead to lower scores
  • CIRs may be taken at least six months prior to approaching for a loan or its enhancement such that if any area requires to be attended, the same can be done
  • Do your spending or repayments (always make payment on or before due date) -carefully/timely. It impacts scores
  • Make payments through RTGS/NEFT/IMPS
  • Make a provision on working capital account for interest posting
  • Keep sufficient credit every month to service the interest of a particular month
  • Maintain a list of cheques issued
  • Check that the scheduled payment got debited
  • Clear the dues before going on holiday
  • Always provide/share the right information with your lender
  • Complete necessary paperwork and understand the origination, sanction and disbursement procedure
  • Before signing up any loan document, read the fine prints and seek clarifications to avoid being charged any hidden fees, service costs, unfavorable exit clauses (Ex. high premium for exiting), etc.
  • Sometimes opting for loans with a longer installment period is more suitable than opting for lower installment periods. Adequate Moratorium (during which principal is not to be returned) is important

Some of the Dont’s to Improve and Maintain a Better Credit Score

  • Default on your loan installments. Making late payments negatively affects your score
  • Approach many banks simultaneously, do you know each search impacts your scores adversely
  • Open many new accounts at one go or open a new account without the knowledge of your banker. This may not be viewed positively by lenders
  • Apply for loan without proper planning
  • Issue cheque if clear balance is not there
  • Overdraw the account
  • Forget the due date of all credit facilities
  • Ignore financial discipline. Paying even a single penny of penal interest, affects your credit history
  • Take credit from unknown person
  • Just rely on memory. Do schedule your payment on the system
  • Just rely on your employee to clear your dues on time
  • Hold back your debts or conceal your financial information

Manjot Kaur

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