Unveiling The Benefits of Credit Report and Scores

Have you ever heard of the terms Credit Report and Credit Score?

When you intend to apply for a loan, you must get a sign of eligibility from the financial institution you aim for. Your credit report and score will show respectively your repayment history and ”score” that will determine your chances of getting approved or rejected by the financial institution to which you have applied.

President Director of PT CRIF Lembaga Informasi Keuangan (CLIK) Leonardo Lapalorcia urges that individuals and business owners should always bear in mind that their reputation is a fundamental asset for each individual and that having a good credit report and score can be extremely important.

The reason is that if you have never been in arrears and always pay installments before the due date, your risk profile will be reported as “Healthy”. On the other hand, if you have multiple credit facilities, from numerous lenders and have installments in arrears, this will negatively affect your credit report and score as well as your chances to access credit in the future.

Where to Use the Credit Score?

Credit Reports and Scores can be used for various purposes, from buying a house or a motorcycle with a loan or even accessing other services like property rental or media and utilities subscriptions or even applying for a job!

Here are some instances where you need a credit score:

• Property ownership: Without a good credit score, securing a mortgage can be difficult. A high score qualifies you for better loan options, potentially saving you thousands on interest payments over the life of your loan.
• Start a business: Launching a business often requires financial support. With a strong credit score, securing a business loan application becomes easier.
• Lower Insurance Rates:  Your insurance premiums can be affected by your credit score. A good score can lower rates on auto, home, and even life insurance policies.
• Job Application: Some companies use OJK’s Financial Information Service System (SLIK) to screen their employees. A poor credit score may give the impression of financial instability, which could affect performance.

How can I check my credit report?

Your credit report can be obtained from various sources, including government agencies like the OJK’s Financial Information Service System (SLIK), and private sources known as Private Credit Bureaus as well as a few other companies that collaborate with Private Credit Bureaus.

Read also: Loan Application Rejected? Check Out These Tips to Get Approved!

Accessing Credit Reports and Scores from Private Credit Bureaus

Private Credit Bureau (PCB) are financial institutions that collect and process all the data collected by OJK and also collect, store, and process additional data reported directly to the bureau which includes e-commerce purchases, digital service subscriptions, electricity bills, and others.

Each credit bureau usually has a different range of credit scores, with the credit score generally ranging from 150-900. The higher the credit score generated, the better the credit reputation. However, credit scores can change over time based on credit payment activities.

If your credit score falls within the range of 650-900, it falls into the category of Good and low-risk debtors. This makes it easier for you to obtain loans or credit. If your credit score falls between 620-649, you are qualified as “Intermediate“ and your chances of being approved will depend more heavily on amount requested, tenure, interest rate and collateral. However, if the score is below 450, the chances of getting approved for a loan at all will be significantly smaller.

If I noticed some errors in my credit report, how can I correct the data?

You might encounter errors or significant differences on your credit report compared with your own record. Should you find inaccuracies in your credit report, this is where a Private Credit Bureau can be beneficial. You can submit your dispute to the Private Credit Bureau to have your report investigated and verified using the existing document and data.

Generally, the time frame to get your report corrected may vary, depending on data complexity, regulatory guidelines, and internal policy by each authority authorized to regulate the Financial Institution.

So, worry not! Besides data from SLIK, you can also get other alternatives for Credit History and Credit Scores supported by data from registered credit bureaus like CLIK. This way, you will have a better understanding and alternative solutions that are suitable for loan plans or even when you have problems with loans.