Top 7 things to do with your credit report

Yes, its official now! You will be able to access your credit scores in December 2010.

The score will range from 300 to 900, indicating the levels of default. It will be available to consumers for a sum not exceeding Rs100 as prescribed by the Reserve bank of India.

Credit Information Bureau India Ltd (CIBIL), which already has a huge database of credit reports - which are currently consulted by banks before sanctioning a loan, is putting up the infrastructure to be ready to service consumers who wish to access their credit reports.

Isn't that great news? Now, many of you maybe wondering how your credit report will look like, how to go about setting any mistakes in the report right, how to maximise the benefits of being able to access your credit score and other such issues.

Well, look no further.

Click NEXT to read about the top seven things you ought to do with your credit report...

1. Get a copy of your credit score every year for an annual review:

You should study the credit report carefully for any hidden flaws or misinterpretations.

If you find anything that you feel requires a second check, do it and if still you are convinced it is indeed a flaw, then you need to address the concern immediately and escalate the issue.

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2) Take up issues through the faster route:

You need to take up issues in your credit report with the bank in question first, if for instance its a debt situation, which has already been paid and is still being recorded as a debt.

The bank will then update the credit agency regarding the status and all is well.

This approach is less time consuming and far better than directly contacting the credit agency.

If in case the bank does not oblige, you can take up the matter with the credit agency and the banking ombudsman after waiting for a period of a month - which is the standard waiting period you must provide to the bank to take necessary action.

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3) Pay your bills on time:

Whether they are loans, credit card payments, insurance premiums - pay it by the due date, as every payment counts.

If you have hassles remembering payments consider setting up an automated system with your bank to get it cleared within the due date.

It is a sure shot way to improve you credit score.

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4) Keep that credit card and use it judiciously:

Maintain and use your credit card.

It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to use it well and avoid making late payments.

Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short term.

This will lay the foundation or provide a sample of how capable you are in managing loans long term, hence this can prove to be an asset to your credit score and help in improving your credit score.

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5) Credit to debit ratio is the key factor:

As with all logic based reports, your credit report is based on the flow of credit and debt.

Here the ratio between these two factors is directly related to your credit score average.

For instance, if u have several outstanding debts, even if you pay them on time it would still affect your credit score as your total net worth goes down.

Hence try and pay off as much debt as possible and keep them to a minimum before taking a fresh debt or loan.

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6) Do not close your credit cards

In line with the same credit to debit ratio aspect, closing down your credit card may not help the score.

Even if you do not use the credit card, it would still make sense not to to close it.

If you have concerns and must absolutely close it, you may choose to do so, but be aware that this also has a say in your credit score.

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7) Quickly act upon issues in the credit report:

Dispute a bad credit botch always, don't sit back and let it remain.

Try solving the issue by contacting the bank and the credit bureau.

If your concerns are taking time to be addressed, credit report systems that are still evolving in India might soon discover at least temporary solutions to the issue like bookmarking the issue as something under the scanner.

This will protect you from being evaluated on the basis of a faulty issue in the credit report.

This may help you have enough time to resolve the issue with supporting evidence regarding any false debt situations.