Too many open accounts can hurt your loan chances

What is the difference between account and enquiry on credit information report?
The ‘accounts’ section of your CIR contains existing and past credit facilities that you have availed from various lenders. For example, if you have a home loan and a personal loan, both will reflect on your CIR along with details such as the name of the lender, type of credit facility, dates of opening and closing (if applicable) of each account, current balances, status of the accounts and your payment history. Your CIR summarises your credit behaviour across these accounts for the last 36 months.

The ‘enquiry’ section of your CIR will be populated when a lender accesses your CIR from the credit bureau in order to evaluate your loan application. If you have applied for a home loan of Rs10,00,000, the ‘enquiry’ section of the CIR will be populated to show the name of the lender you applied to, along with the enquiry date (date on which the lender has accessed your CIR), enquiry purpose (in this case it was a home loan) and the enquiry amount (which would be for Rs10,00,000 in this case). All enquiries made by lenders in the past are displayed here.

There is a critical distinction between account and enquiry. The former denotes actual loan obligations that you currently are bearing while the latter denotes that you had applied for a loan or other credit facility from various lenders. Given that open accounts have an impact on your ability to repay additional debt obligations, too many open accounts may result in your loan application being viewed negatively by a lender. This need not necessarily be the case if you have many enquiries on your CIR.

What is the difference between high credit and sanctioned amount on my CIR?
‘High credit’ in the accounts section of your CIR is only displayed with credit card and overdraft accounts. It denotes the highest credit utilised in a single month over the life of that credit card. For example, 2 years ago I spent Rs75,000 on some emergency medical treatment on my credit card (which has a credit limit of Rs1,00,000). As it was the single highest monthly balance in the history of my credit card usage, it got reflected in my CIR.

‘Sanctioned amount’ is displayed along with credit facilities other than credit card and overdraft accounts. The sanctioned amount field denotes the amount disbursed to you.

What does date reported mean?
The date reported on your CIR indicates the date on which the information was reported to the credit bureau. Sometimes if a lender has stopped reporting information (say on a closed account), the date reported could be a year or more old. If your date reported on open accounts is not within the last 3 months of the date of the CIR, you should contact the bureau to get this updated.

The writer is senior vice president - consumer relations, Cibil, and can be reached at creditwise@cibil.com