6 Things that Reflect in your Credit Report | AU Small Finance Bank
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6 Things that Reflect in your Credit Report

    We all know a credit report keeps a track of our credit history and whether we have repaid our loans with discipline or not. If our report has good scores, it helps in getting future loans approved.


    Do you know how vital your Credit Report is?

    Let us narrate a story to explain it further.


    Mr. Munir had big dreams about his daughter’s education and wanted her to pursue higher studies abroad. He always thought money would not be a problem as he can easily take an educational loan from his bank as he had done earlier, so he had applied for one. After a couple of days, he received a message from bank saying his application for the loan has been rejected. He was perplexed to see the message and did not know what went wrong. However, at the same time, his friends had also applied for the loan and theirs was approved easily. So, he decided to know the reason behind it, and visited his bank.

    The bank then informed him that due to his poor credit score, they could not approve his loan. Now he sat down and listed down all the mistakes he had made on the basis of his credit report. In his research, he found that only 76% of people’s loans are approved if their credit score is 750 or more. Yet, banks look for not just scores, but also other things that reflect the financial background of a person. Some of them are:

    1. Types of credit accounts:

      Even if you have a lot of money kept in your fixed deposit or savings account, it has no influence on your credit history. For credit report, agencies look for your Loan accounts, Credit card and Secured or Unsecured debt. Through these accounts, banks analyze the repayment cycles and the time taken to repay the credit. Based on your repayment discipline, banks assign a score.
    2. Written off account:

      If any loan or credit is taken and is not paid during its tenure then after some months, these accounts will be designated as Written Off. This is seen in bad light when approving loans and impacts credit report.
    3. Settled account:

      Any credit account that has not been paid in its entirety and still has some amount left to be paid. However, if the account has been designated as “settled”, then it impacts the credit report of the account holder because he/she was unable to repay all his/her debt.
    4. Open and Closed account:

      An account that is currently in use and requires to be repaid currently is known as an open account. This account still exercises a burden. On the other hand, closed accounts are the one which has been repaid fully and are not in any repayment cycle. So, if you have repaid the full amount within its time, then this can boost your credit report immensely.
    5. Jointly held loan account or Authorised user:

      If you are a co-applicant to a loan account or an Authorised user of a credit card and the other applicant defaults on the repayment, then you will be the one answerable to pay the debt. Therefore, this can adversely affect your credit score unknowingly.
    6. Guarantor of an account:

      If you have guaranteed for a person that he will repay his/her full debt within the due time and he/she fails to do so. Then you will become liable to repay the debt, even if you haven't used the credit facility yourself. This will add to your burden and take a toll on your credit report.

    The above highlights so many aspects we do not bother to consider. So, from now on, do consciously try to repay all your loans to maintain a clean credit report.

    Also check out more about credit rating 

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