The credit bureaus gather information about all the loans that you have taken, credit card balances and your payment patterns to formulate a credit score based on all this data. Sometimes it may appear that the credit bureaus know almost everything about your financial aspects. Well, not quite everything! There are many aspects that your credit report and credit score do not reveal.
The Credit score is not a factor in your income level. So whenever you get a raise in your salary, do not expect a corresponding increase in your credit score.
Though your income level is an important factor that is considered by lenders before approving loans, credit report and score have no information regarding this. That is why you are required to submit your salary slips and other employment information separately when you apply for credit.
Bank balance, investments and other assets
When you apply for credit, lenders are keen to know how much money you have in your saving account especially if you need to make a down payment for the loan. They may also want to know the investments and other liquid assets that you have in order to judge your repayment capacity.
But unfortunately, your score does not reveal any of this information. The score only tells how well you have been repaying your past obligations. It does not reflect your ability to handle future loans.
Credit report and score does not reveal your employment status. If you had mentioned about your employer’s name in any of the credit applications you submitted earlier, it may show up on the report just for records.
But your current employment status is neither reflected on your credit report nor does it affect the credit score calculation. So if you lose your job it will not directly hurt your score. But if you fail to meet your loan obligations as a result of the loss of job then the score would get affected.
Marital status and spouse’s credit history
Your marital status will not affect your credit report and score in any way. Your spouse and you will have individual credit reports and scores and one will not affect the other in any way. So breathe a sigh of relief if your spouse’s score isn’t good enough. But if you both apply for a joint loan then the payment behaviour will have an effect on both your scores.
Your age isn’t factored in during credit score calculation. So whether you have just started your career or whether you are retired, it will not be reflected on your report. Though indirectly, age does affect your score in some way. A person who has just started using a credit card or is new to loans will not have a long past history of credit.
The average age of his accounts will be less. A person in his 60’s will have built up a strong credit profile with long standing accounts. He will surely be at an advantage when it comes to average age of accounts and the length of the credit history that is an important factor that affects the score of an individual.
Interest you pay on loans
The credit report and score do not reveal the interest rates that you are paying on your current loan obligations. But surely the reverse is true. Credit score will determine the interest rates that your future lenders will set on the loans that they approve.
That is why it is important to keep track of your score regularly and take measures to improve CIBIL score.Also, monitor your credit report to ensure that the facts and information recorded in the report are accurate. After all the credit report data is what’s used in your CIBIL score calculation.
Your credit report and credit scores are important tools that help lenders assess a borrower’s credit worthiness. It tells them how the borrower has handled his past loan obligations. But it definitely does not give the complete picture.
Lenders need to look at your income levels, assets and employment status as well to judge your future repaying capacity. So be ready with the relevant documents like your salary slips, income tax returns, bank statements and other such proofs when you submit a credit application.