% of Borrowers getting Fresh Bank Loan
On CIBIL Score
BANK LOAN HELP CENTER
CIBIL REPORT & CIBIL RATING
Thanks to the advent of credit information companies like CIBIL, banks and other lenders in NBFC, FI space are able to ascertain the credit history of their current as well as prospective borrowers and judge their credit worthiness to sanction a loan.
Confused Borrower :
Borrowers and Guarantors are panicky, confused and nurse grievance against the CIBIL score with nowhere to go. Reasons are many. Some have a bad score and do not know how to improve it. Some do not have even the faintest idea as to how the score can adversely affect their loan taking ability. Others have settled a sticky loan but still their name appears as a defaulter in CIBIL list and neither the settling bank listens to them nor the prospective lender believes them. They are in typical stuck position. Some have paid regularly but have disputes on amount or interest rate and the disputed amount is not paid as there has not been any solution or the same is in legal domain and the bank notwithstanding the above dispute puts them in default list.
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What is a CIBIL Score?
It is called CIBIL consumer Credit Information Report (CIR) which contains consumer information ,accounts and the score is indicative of the financial & credit health of the consumer. Higher the score, the better. The score is a 3-digit number between 300 to 900. Score below 750 are generally considered unworthy of fresh loan exposure. The score for individuals contain i) CIBIL TRANSUNION SCORE and ii) CIBIL PERSONAL LOAN SCORE.
What does CIR normally contain?
It contains Name, Date of Birth, PAN / Passport / Voter ID / Driving License / Telephone numbers. It also contains type of loans taken such as personal loans, auto loans, housing loans, overdrafts, credit card loans etc.
It also contains ownership status such as individual/ joint/ guarantor/ Authorized User etc.
It furnishes summary of individual loan accounts such as sanction date, outstanding on reporting date, overdue, past due, type of account such as Standard/ Sub-Standard/ Doubtful/ Loss etc. Name of Financial Institutions may or may not be disclosed. Total summary of the accounts such as number of accounts, aggregate sanction, aggregate outstanding are given.
Lastly number of enquiries past 30 days, past 12 months and past 24 months are given.
How often lenders revalidate the data submitted to credit information companies ?
Banks and other lenders are required to revalidate the data submitted to credit information companies such as CIBIL within 30 days. But many fail to do so. This despite their code of commitment to customers that once the irregular or sticky account is regularized after being in default either through full payment or compromise or OTS, the information to be updated in the subsequent monthly report.
Will the prospective , present lender listen to me if I am a victim as above ?
In reality, the prospective or present lending bank do not take cognizance of customer's point and simply ask him to erase his name from the defaulter list. One has to take up the matter with the reporting bank for branding him as a defaulter in spite of clearing the dues in totality or through settlement.
Do the Banks resort to above practice deliberately to extract the foregone amount as a write off portion ?
In general , no. Mostly these lacunae come up as the matter of updating is not given due priority after the loan is closed and the task is no more a priority for the banker.
Should the borrower be treated as a defaulter even after payment of compromise or OTS amount and his credit history should continue to be unfavorable?
Though there is no clear view on it, these borrowers should not be treated as defaulters with an impaired credit history after settlement. Reserve Bank of India has taken cognizance of such activities by some banks and is in the process of framing guidelines to deter banks from declaring borrowers who have paid the negotiated amount , as defaulters. Pending issuance of clear cut guidelines, the aggrieved borrower or guarantor can take up on their own with the respective banks.
Is CIBIL the only Credit Information Agency in operation?
Though as on 31st March, 2010, it is the only agency operational in credit information business, RBI has granted permission to 2 other agencies to commence operation. Experian Credit Information Company of India Pvt Ltd has commenced operation from 17/2/2010 and Equifax Credit Information Services (P) Ltd commenced operation from 26/3/2010. Another company, Highmark Credit Information Services Pvt Ltd has received in principle approval.
What are the areas covered for dissemination of credit information ?
Right now, the areas covered are institutional loans and credit card outstanding. In future, utility bill outstanding such as electricity bill, landline phone & mobile bills are scheduled to be included.
How to obtain CIBIL score?
CIBIL score can be obtained online or offline. It costs Rs 470/ per CIR. Payment can be made either through DD or online through debit/credit cards or cash cards. For offline score, form to be accompanied by a self attested xerox copy of document for ID proof (PAN card/VoterID/Passport/Driving license ) and by a self attested xerox copy of document for address proof (Bank statement / Electric Bill / Landline telephone Bill / Credit card statement ). Passport & Driving Licenses should be alive and address proof documents should not be more than 3 months old as on date of filing.
How to handle disputes arising out of CIBIL CIR?
One can lodge online complaint quoting the control number of the CIR, Name, Address, Date of Birth and Nature of Discrepancies.
What are the areas of resolving disputes?
The disputes are broadly classified into 3 groups - consumer/borrower information, Account Details, Ownership details.
Does good credit score mean cheaper loans?
Normally a good credit score does not mean a cheaper loan but one can get loans faster with fewer verifications and there is a better chance of loan application getting approved. However for unsecured loans and vehicle loans, some banks offer a better deal with a particular profile such as persons working in a particular company or those having salary accounts with banks for a particular period or who have a good credit score. Process differentiation is the first advantage for a customer with good credit score followed by rate differentiation. The latter would take some time to mature.
Is there any guideline to regulate the Credit Information Companies (CIC) ?
Formation & functioning of the credit information companies is governed by Credit Information Companies (Regulation) Act, 2005.
CIBIL score interpretation by the Bankers
Less than 600 - Bad Credit
History. High Probability of being a Defaulter. Need to Re-work
completely by understanding Profile, Income Level, Past Repayments to
increase Credit Score.
Score of -1 - Insufficient history to determine Credit Rating. Generally the first time takers.
Scoring Factors in CIBIL SCORE
Cibil Transunion Score: (1) one or more trades written off in the past 24 months. (2)Length of time since most recent account delinquency is too short. (3) Length of time accounts have been established is too short. (4) Presence of account delinquency in the past.
Personal Loan Score: (1) One or more trades written off in the past 24 months. (2) Presence of delinquency. (3) Not enough available credit
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