The Equifax Credit Information Report is a three digit number that is a summary of the customer’s credit history. This score is generated based on the information provided by the financial institutions. This report contains information regarding the customer’s history of credit payment across various loans and also institutions over a period of time.
When you borrow money, the bank sends information to a credit bureau which shares a detailed credit report on how well you have managed your debt. The credit report also includes a credit summary of all the loans and credit cards and their repayment history in addition to the personal identification information it has collected from the various lenders where you may have taken a credit card or a loan.
From the information received in the credit report, the credit bureau determines a credit score based on your previous credit performance, your current debt levels, the amount of time you have had the credit, the types of credit you have available and your pursuit of a new credit. Credit information companies have developed their individual credit scores, which is typically a three-digit number that represents a summary of individuals' credit history and credit rating. This score ranges from 300 to 900, with 900 being the best score.
A credit score is the major factor that determines the creditworthiness of the individual. For every financial step and every financial decision, the banks, as part of their due diligence process, gauge the creditworthiness based on credit scores. All the loans, credit card payments, defaults and much more make up the credit history from which credit score is calculated using algorithm. Therefore, credit score reflects the extent of the probability of an individual.
An individual’s credit history is submitted to credit bureaus by banks and financial institutions on a monthly basis. These credit scores are the deciding factor for banks to lend loans and also to decide the terms and conditions on which the loans are to be given. Banks prefers the borrowers with low outstanding balances, long credit history and high credit score. A good credit profile puts the borrowers in a position to bargain for better conditions to draw loans at best available rates. Hence, it can be rightly said, better the credit score, better the interest rates.
The different interest rate regime based upon the credit score of the individual is like rewarding customers for being financially disciplined. So, an individual with a better score get better interest rates and vice versa for lower credit score. To get loans at better interest rates, one must monitor his credit profile and make efforts to maintain a good credit score.
The credit report of an individual is constituted from data shared by various banks and financial institutions to collate into one comprehensive document. It is a compilation of data on the entire spectrum of the customer’s credit related activity including details on repayment record, credit card limit, previous application for loans or credit card, any settled or written off loans and any other credit related activity.
Broadly, there are following sections in a credit report:
Equifax score: It is the credit score, which is calculated on the basis of your credit history. It ranges between300-900.
Personal information: Includes your name, date of birth, gender and KYC.
Contact information: Address and contact numbers. It may include up to last 4 addresses.
Employment information: Monthly or annual income details as provided by the banks and financial institutions.
Account information: This section includes the details of your credit facilities, account numbers and types, current balance and a monthly record (of up to 3 years) of your payments.
Enquiry information: Every time you apply for a loan or credit card, the respective bank or financial institution accesses your credit report. The system makes a note of the activity in your credit history and marked it as Enquiries.
You will have an adverse impact on your ability to acquire a loan after knowing an error in your credit report. As an individual, it is your responsibility to check your credit report for any errors and resolve them by approaching the relevant authority.
Some of the common errors which can find their way into your Equifax credit report are highlighted below:
Old Information - One of the most common errors which can be found in a report relates to problems associated with the identity of an individual. This could be outdated personal information like the address and name of a member. In certain cases, failure to update your information could see different individuals with the same address having similar credit reports, leading to confusion
Account errors - We live in a time where we have multiple bank accounts with different banks, with a lot of us often losing track of the number of accounts in our name. A credit report can often miss or add an account with the account of individuals who have similar names or addresses, thereby leading to misinterpreted reports. This can lead to mistaken identity and identity theft, which can be a serious issue, if left unresolved
Wrong account information – It is possible for us to provide the wrong account details when we register for Equifax, with these errors reflecting in our credit reports, unless corrected. Simple typos can have a compound effect on the overall credit history of an individual
Clerical errors – One can make silly mistakes when filing the KYC form. Mistakes in the date of birth or address need to be resolved immediately as they could potentially result in an identity crisis
Errors can be committed on the part of an individual, a financial institution or the credit bureau (Equifax) and they can be rectified by following a simple procedure.
Identification of error – The first step to resolve an error is to identify it. As a consumer, you should observe the report and point out errors, if any.
Reporting error – Once an error has been identified, it is your duty to alert the relevant authority. If an error has occurred on part of a financial institution, you should let them know the nature of the error. The credit bureau can make changes in a credit report only after the error has been rectified by the financial organization.
Timeline – After an error has been identified and reported, the respective institution or bureau is expected to make changes within 30 days, failing which a consumer can approach an ombudsman to get the errors rectified.
Intimation - In cases where it is not possible to rectify any errors, the bureau will intimate you about the same. Changes which have been implemented will also be communicated, helping you stay abreast of the latest happenings.
Dispute Resolution Form - If you find an error in your credit report, you can use the Dispute Resolution Form to rectify it. This form should be filled and submitted to the bureau. An individual should provide supporting documents like self-attested address and ID proof and post it to the Equifax office.
Your credit scores, which help lenders, decide whether to extend credit to you and at what interest rate, are calculated from data in your credit report. Those should be checked at least once a year unless you plan to apply for credit. If you are working to build or rebuild credit, or for any other reasons an individual should peek the credit report about once a month so that you can monitor your scores.