DYK: You can get one free credit report each year from 2017

As per RBI's mandate, from January 2017, you will be able to access one detailed report in the electronic form free of cost once a year

The Reserve Bank of India (RBI) has made it mandatory for all credit information agencies to provide a full credit report free of cost on request once in a calendar year to individuals whose credit history is available. This will come into force from 1 January 2017.

What is a credit information report (CIR)?

It contains details of your credit history collated by a credit information company. At present, there are four such companies in India—Credit Information Bureau (India) Ltd (Cibil), Equifax Credit Information Services Pvt. Ltd, Experian Credit Information Co. of India Pvt. Ltd and High Mark Credit Information Services Pvt. Ltd.

Whenever you apply for a loan, the lender asks a credit bureau for your credit background to check if you have paid earlier dues in time or not. The information shows your monthly payments and how you manage your credit. This forms a part of your overall credit history and will reflect in your CIR.

A CIR also helps individuals check their own eligibility for a loan.

Based on the information available, a score is assigned. According to Cibil, 79% of loans approved are for individuals with a score higher than 750 (overall range is 300-900).

How to get a credit report?

To get details of your credit history, you generally have to buy the report from a credit information agency. Currently, you get a report along with a credit score once a year for 400-550. To get this, you have to share basic details such as date of birth, Permanent Account Number (PAN) and email to buy a report online. From January 2017, however, you will be able to access one detailed report in the electronic form free of cost, once a year.

This will contain all the details that a bank will get as part of a similar report if you request for a fresh loan. The report will show the latest position of loan(s) that you may have with one or more lenders as per records available.

You can also rectify any errors that may be in a report, through a dispute resolution process.

The central bank has asked credit rating companies to put the process of accessing a free report on their respective websites.

Build a healthy score

The credit report will have your account information, which has details of monthly payments for at least 36 months, names of banks from where you have loans, and the type of loan (home, auto, personal loan and credit card). It also gives status of outstanding loans.

Then there is an enquiry section that shows details of banks that have viewed your report to assess a loan application, your date of enquiry, type of loan (secured or unsecured) and amount.

Late payments indicate that you are unable to service existing obligations. So, avoid delay in payments and defaults. You should also restrict enquiries for new loans as it indicates you are planning to take greater credit risk, and this reflects negatively on your credit history.