Credit Information Bureau India Ltd. is apex agency in India that brings facility of calculating credit score to make applying for loan and credit card easy not only for personal use but for corporate use too. CIBIL is among top 1000 organization in the world that holds the ISO 27001, which is highest in the world in terms of quality standards.
A credit report is a precise document that contains thorough details of borrowing history and repayment record of an individual or corporate. The banks and financial institutions can get a detailed picture of credit history and current credit behavior to determine whether an applicant is accountable to get a loan approval or not. Credit Information Bureau India Limited (CIBIL) is the country first credit information bureau that records and maintains all credit-related details of an individual or corporate. It allows finance lenders to conveniently access the CIBIL report of a new applicant so that they can make quick and transparent lending decisions. Credit Information Bureau collects individuals credit details including number of loans currently running, total credit limit, number of hard inquiries, any late or missed payment, and other such details.
A credit report is a distinct unified document covering credit history from different lenders over a significant period of time. Generally, the report covers the information like:
o Personal information including name, gender, age, residential address, and occupation
o Employment details and annual income
o Earlier and current loan details along with the repayment record
o Number of hard enquiries made by potential debt providers on receiving loan applications
o Any default or settled loans
o Credit Utilization Ratio, that is, available credit card limit and the amount spent monthly
o Any credit card payment defaults
o Overall credit score ranging from 300 to 900
Report issued by CIBIL is known as credit information report (CIR) that brings complete information about entire transaction history of company or individual. Apart from CIBIL there are other reputed agency Experian Credit Information Company of India Pvt Ltd. that avails top class services to users.
Credit report contains information about all repayment done by customer over certain period of time but it never contains the information about loans, fixed deposits and other services. Credit Information Bureau (India) Limited (CIBIL) TransUnion Score is combination of three digits that point out the transaction credit of customer.
Credit information report avails the information about the credit earned by the customer from credit card, home loan, personal loan, overdraft and auto loan. It will also contain the record of employment details, personal details, bank account related information, contact information too. Some main component are specified below
a. In first segment user will get information about their CIBIL score in range of 300-900, on the basis of information provided by you to CIBIL.
b. Personal information section contains the complete information about customer including name, address, date of birth, voter ID, PAN card and other information.
c. In sub section under personal information, records regarding lending amount and date of application will be mentioned.
d. Next section is contact section that avails the information about candidate email address, mobile number, telephone etc. Here, it will also be specified that specified address is official or permanent residential address.
e. Account section specifies the details provided by customer to respective organization while applying for loan. Here, information regarding your credit and loans will be available as per CIBIL policy.
f. Employment section specifies information about the candidate income resources and other transaction records along with profession of the candidate.
g. Enquiry section contains the information provided by the vendor while gathering information regarding policy and other terms and conditions.
h. Consumer dispute remark is final segment or component of this section that will avail information about the report accessed by the customer every year with date and other information i.e. credit related information.
Each component is vital and important component of CIBIL report and must be present in report to keep report valuable and authentic.
As we know that this is highly reputed and valuable report that CIBIL issue to avails individual credit value to help banks or other financial organizations to make their task easy and authentic. Some of them are
a. Helps in staying clear of debt traps.
b. Better score on the credit report provides leverage when negotiating interest rates.
c. A unified report with all your previous and current credit history.
d. CIBIL credit reports form the basis of releasing loans to a customer.
e. An exhaustive report to help you nurture better financial discipline.
CIBIL issue credit information report of individual on the basis of their credit worth. Statically specified numbers are CIR of individual. If are applying or planning to apply for loan or credit card. CIR is mandatory for all the process. Prime factors of CIR are specified below
a. New credit facility for customers.
b. Customer payment history specifies the details about the transaction details about the past three months along with Days Past Dues (DPD) that specify about delay in EMI repayment.
c. Enquiry section refers to all inquires made by you to get loan, credit card and it will also refer to the mistakes made by you during the process. It will also specify details to calculate the details regarding number of attempts made by you.
d. Current outstanding balance refers to details about reaming EMI payment and credits.
A credit score determines the worthiness of a borrower to get a loan approved. You can take it as a report card of a student as for whether he/she will get an admission to the particular college or not. The reporting system analyzes the entire credit information of a borrower, in past and current as well, and generates a three-digit number ranging from 300 to 900 to quantify the financial accountability of an individual. So, by knowing the score, an individual can easily evaluate where he or she stands to get a loan application approved. However, the report does not only contain the credit score, but, also counts for CIR, income, and existing loan obligations. Also, the loan approval depends on the credit policies of individual banks. Suppose, the score is 450 and Bank A rejects the application, but, at the same time, Bank B approves the application, although at higher interest rate than usual.
Undoubtedly, the most crucial factor is the repayment history. In fact, repayment history covers about 30% of the entire score. Therefore, the financial analysts always suggest paying off the installments and other borrowings right on time and in full, of course, to form an influencing credit score. However, other factors include:
The more you make timely payments, the better will score be. Percentage of timely payments is the most vital factor to improve the lending score and thus, it is most considered while calculating the score to denote the reliability of a borrower. Banks and other financial institutions assure that you are likely to make timely payments. Even one or two installment bounce can signify that you cannot make timely payments. Therefore, pay all credit card bills, EMIs, and any other debts on time, in order, to gain a good score.
There are certain factors that are counted for negative marks such as accounts in collection due to default payments, foreclosure, written off or settled status, and so on. These negative marks can be a heavy loss for the score and could probably strictly restrict the eligibility of the default borrower. Negative marks mentioned in the score will indicate that a borrower fails to manage their debt adequately, which will serve as a warning sign to potential lenders and ultimately, the loan application will be rejected. Even if a borrower wishes to overcome the negative marks, it may take years for it.
When a borrower has a long-term credit history, financial institutions make double-sure of having detailed and substantial information for the credit behavior of a borrower. For example, if you are holding a credit card from last ten years, registered financial lenders will check your repayment record for the card for a specific period of time.
When a potential money lender or credit card issuer checks the CIR to determine the accountability of loan approval, it is termed as hard enquiry. A single hard enquiry slightly reduce the credit score, but, the same for multiple times without equivalent loan approvals denote that you are applying for a credit to several lenders in order to get the approval at least from one. Therefore, increased number of hard inquiries is another factor to influence the good score and thus, high degree of inquiries in a limited time frame ultimately decreases an individuals credit score.
a. A borrower has to fill up the loan application form and submit it to the bank or money lender institution
b. A potential lending authority will check the CIBIL score and report of an applicant
c. If an applicant has a score less than 650, then it is likely to get the application rejected
d. If the score comes out higher than 650, then the eligibility criteria of an applicant is checked along with the mandatory documents submitted by the candidate.
Well, this is a major concern among so many applicants whose loan application got rejected even after having a good CIBIL score. It may sound weird, but, its true that an application can be rejected for so many other reasons, other than a credit score and report.
Too many loans earlier: If the lender notices that an applicant has already taken too many loans previously, then probably there are chances of getting the application rejected.
Constantly switching jobs: Banks are very strict in terms of borrowers job stability and if a candidate is a frequently switches the job, the loan application will be rejected for sure. Thus, stick to a job at least for more than two years.
Going for a joint credit with sister or friends: Banks dont approve the application for joint loan with sister or friends, though the same can be approved when applied with brother or parents.
Being a loan guarantor to a defaulter: People generally become a loan guarantor of their friends and relatives without being cautious that if the person, they are signing a guarantor application for, fails to pay the loan amount right on time, then the score of the guarantor will also get affected. Banks usually dont approve the applications of loan guarantor of a defaulter.
Loan application rejected previously: If an applicants application has been rejected earlier, it goes into the credit records and other banks and lending institutions check for such records. Thus, if a request is re-applied, there is lots of possibility of getting it disapproved.
Poor CIBIL score of co-applicant: If you are requesting for a joint loan approval, make sure that your co-applicant too has a good score; otherwise there are high chances of getting the request rejected.
Having the same residential address as of the defaulter: Debt applications are checked very precisely, so, if the residential address matches with the defaulters address, then the request will surely be rejected.
No demonstration of savings: If your debt request has been rejected and you are unsure about the exact reason for it, then first of all, check your saving account details because many a time, a loan application gets rejected if an applicant fails to maintain their saving accounts with a minimum balance.
Frequently changing residential address: If an applicant frequently keeps moving from one residential address to another, there are high chances that the request will get refused.
False documents: As mentioned above as well, banks are very specific in terms of precisely checking every single detail of an applicant and the documents submitted, if any of the documents is found to be untrue, the loan application will get disapproved because falsified documents imply that a person is trying to bluff the lender.
Making frequent quote request: If a person makes frequent quote request then it is considered that a person is desperate to get the loan. This is being another factor to influence loan application disapproval.
Avoiding verification calls: Verification calls are one of the important application process, so if a person ignores to answer the verification calls, the request will probably get rejected.
a. Know and understand Once the request is disapproved, first of all, know and understand the reason for it. According to the norms of RBI, a bank is not liable to reject the application without furnishing a valid reason.
b. Re-check your CIBIL score Undoubtedly, low credit score is a major reason for debt request disapproval, so check for your current credit score and make sure to fix it soon, in case the score is low.
c. Make an error check Re-check if whether you have submitted updated and accurate documents or not. A credit report counts for the demographic, credit account details, and payment history, therefore, also make sure that the information linked is error-free. If there is any error found, request the CIB (Credit Information Bureau) to rectify the error.
To increase your CIBIL Score do following process as per bank recruitment: -
a. Pay your regular bills on time to improve your credit score.
b. Never leave any remaining amount.
c. Always pay your EMI on time.
d. Keep your credit limit stable for better credit history.
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