Know your CIR and Credit Score

Sunil had availed a floating rate housing loan from SBI during the year 2008 at 8% interest. Now the rate has increased to 11%.The EMI has increased from ` 26,000/- per month to `34,000/-. He is struggling to manage his budget and nearing default on repayment. He is very much worried, now-a-days. In case he defaults, his name will be reported to CIBIL, by the bank. His credit score will get reduced and he will find it difficult to avail loan from the banks, in future . Sunil is aware of the implications but many do not know how to get the credit information report and the credit score. In fact like health check up, one must check the credit information report at least once, annually.

What is credit information report?

Credit Information Report (CIR) provides the credit history of borrowers. It contains basic information in detail about all the credit facilities availed, past payment history, amount overdue, current status, etc. It also contains details about enquiries made by Banks/ Financial institutions for your credit report. CIBIL is India’s first credit information bureau which provides credit information report.   As many as 500 different banks and financial institutions are CIBIL’s clients and they report each of their customer’s actions to them. If you take a home loan from HDFC bank, then HDFC bank reports to CIBIL about it. If there is any default in the payment of EMI, it is also reported to CIBIL and getting loans from any bank would become difficult.

How to get Credit Information Report (CIR)?

You need to download the form from www.cibil.com and complete the application giving one’s details. The KYC documents on photo ID and residence proof need to be submitted along with a draft for ` 142/ -. It takes around 10-15 days to get the credit information report (CIR).

What is credit score?

The credit rating is done by CIBIL on a scale of 300-900 where 300 is the lowest and 900 is the highest score. Credit rating is calculated on the basis of your credit history. Credit history means loan value, defaults in loan payment, loan types (secured or unsecured), loan request rejections, frequency of opening loan account etc. Loan is sanctioned on the basis of your credit rating. If your credit rating is low, then you may not get loan or bank may sanction loan at a higher rate. Each and every bank will determine their own cut-off for sanctioning a loan. For example, bank A may require a minimum 700 score for approving a loan while bank B may require a minimum 600 score for approval. Basically banks require higher score for unsecured loans like personal loans or credit cards. While for secured loan, it could be slightly lower.

What affects the credit score?

  • Late payments or defaults in repayments
  • High outstanding balances in loans and credit card accounts
  • High percentage of personal loans or unsecured loans
  • Multiple loan applications made for a credit facility
  • Closure of loans through “Settlements” or “Write offs”.

How to get Credit Score ?

Online report

To know about your credit history, you may log on to www.cibil.com and fill in an online request form. You have to make a payment of   Rs 450/-for CIR along with credit score through net banking, debit card or credit card. You have to answer at least three questions, out of five questions based on credit history.

The entire process will be paperless, which means no identity proof or other documents are typically required under  KYC  rules. One gets only five questions to authenticate his identity online and must answer at least three successfully to be able to get his Credit Information Report and credit score. Only the person who has applied for the credit score can answer these questions as they are personalised, based on his credit history. Questions are randomly chosen and if the consumer fails to answer at least three questions correctly then, he has to go through  offline process, without making any extra payment.

Off line report

You need to down load the form from www.cibil.com and complete the application with personal details. The KYC documents on photo ID and residence proof need to be submitted physically by mail to the address provided in the CIBIL website.

This is an excellent facility where the citizen would know in advance, where they stand and whether they will get a loan or not. A very welcome move by CIBIL.

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