Anyone who is planning to borrow funds or has done it in the past knows what a credit report is for. These reports are often generated by the finance institutes that you approach to avail their services. However, certain organizations do it for free to entice borrowers.
One might think there is no harm in generating free credit reports for say acquiring a personal loan. But the truth is that it can cause a negative effect sometimes on your CIBIL score and personal information. If you are wondering how all this is possible because of one free credit report, then this article will highlight a few critical points.
We will even give you an idea, about certain other things like what are credit reports and scores.
What is CIBIL score?
A CIBIL score in India is a rating which highlights the borrower’s creditworthiness. It allows financing institutions to understand if the potential borrower is worth taking a risk for. In other words, if the CIBIL score or rating of a borrower is low, then the transaction is considered very risky by the financing institute. Thus, it may result in rejection of the borrower from the list of potential applicants.
On the other hand, if the CIBIL score of an applicant is closer to the higher range, then the transaction is considered safe by a lender. This means the borrower will be able to acquire found easily compared to others. Besides, it also highlights his repaying capacity, when it comes to the principal amount and the interest. If you wish to calculate personal loan eligibility, even that can help you move towards a loan approval.
What is a free credit report?
The free credit report is a very critical document in the world of Banking and Finance. These credit reports can be categorized as a complete portfolio of a borrower regarding his financial transactions. Apart from this, with the help of these reports, you can also improve your CIBIL score. It is as they will highlight the reasons which are causing a downfall.
A typical credit report has multiple sections. These sections are related to a borrower’s credit history, personal information, credit enquiries, and public records. This gives the financing institution all required information about an applicant. These credit reports are usually generated by paying a certain fee. However, sometimes you can even get it for free by creditors trying to market their services.
Why is it not safe to generate free credit reports?
Some borrowers think that a free credit report can help them calculate CIBIL score easily. But they often miss out the negative effects of the same. One of the biggest negative effects of a free credit report is that you have to share your personal information with a third party. There are cases, where people pretend to be a financing institute to acquire your personal information.
Besides, apart from the benefit of good CIBIL score, that a report displays, you make yourself vulnerable to your information being misused. This becomes all the more prominent since a free credit report will have personal information like your PAN card number, Aadhaar card number, Bank details and Salary information.
Always be cautious of who you give your personal information to, in order to prevent any misuse.