Certain facts on CIBIL you might not have known

Sunil Sharma (name changed) working in a bank as a senior manager applied for a personal loan of Rs 5,00,000  from the loan department of the same bank. He got a letter from the bank after a few days that the loan application was rejected. He inquired further and found something very surprising. He has housing loan from another bank and it was informed to him that for two consecutive months the EMI (Equated Monthly Installment) had got bounced. In fact Sunil knew about this. And he explained to the executive of HIS bank that it was not his mistake. He had given some post dated cheques to the loaner bank and the staff forgot to put in the cheques on the due date consecutively for two months. Sunil explained further that he took up the issue with that bank and his ECS was then finally restored. Then why his personal loan application is now rejected?

Prakash is working with a private company. He applied for a car loan from a private bank. The loan was refused. The reason given is that there are certain outstanding issues on his credit card payment such as small amount pending in terms of few paisas which has grown to few hundred Rupees and the issue is still not resolved. He says the amount was so low that he never bothered to clear the outstanding.  He could get the loan from some other bank who helped him resolve the issue of the outstanding.

Capt. Sujay was asked to clear his credit card outstanding of Rs 30000 to avail a loan of 40L. Sujay says it is in dispute and the credit card issuing bank is at fault. Why should I remind them again and again? They are not ready to even negotiate on this. Let them do whatever they want. In fact the outstanding amount is now increasing and on top of that getting a loan has become difficult for him.

Very often it happens with many of us. We clear the dispute with the concerned bank or financial institutions. But in spite of this when we apply for another loan or a new loan it is either denied or a reference of a report of CIBIL ( CREDIT INFORMATION BUREAU INDIA LTD.) is given. Very often it is told to us that your CIBIL scores are low or let us talk a figure say, 680.

What is CIBIL all about?

Credit Information Bureau (India) Limited or CIBIL is a Credit Information Company (CIC) founded in August 2000. Post Inception, it has come to play a critical role in India’s financial system. Whether it is to help loan providers manage their business or help consumers secure credit faster and at better terms, the use of CIBIL’s products have led to a massive change in the way the credit life cycle is managed by both loan providers and consumers. CIBIL collects and maintains records of an individual‘s payments pertaining to loans and credit cards. These records are submitted to CIBIL by banks and other lenders, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to lenders in order to help evaluate and approve loan applications.

Many times when we close a dispute with a credit card provider or a loan provider but it is not guaranteed that your CIR has reached  CIBIL. The institution may not do this for you. For them you are no more a client in dispute as the settlement has been done or the bounced EMIs issue is resolved. They have received their outstanding and the issue ends there. If they inform CIBIL, well if they do not. Then what?

Your Credit Information Report (CIR) plays a large part in the loan application process. Hence, any discrepancy in your CIR may result in reduced chances of a loan approval. Therefore, it is important that the information on your CIR is accurate and updated.

The CIBIL CIR consists of Consumer / Borrower Information,  Account Information and Enquiries. If any information on your CIR is inaccurate or needs to be updated, CIBIL assists you in rectifying / updating your CIR after getting all the proofs required. You can raise a dispute online. This process is known as Dispute Resolution.

A Dispute Request can be raised based on either a CIR purchased by you directly from CIBIL or a CIR accessed by the Credit Institution when you have applied for a loan with that Credit Institution

Since, the credit score and CIR not only helps loan providers identify consumers who are likely to be able to pay back their loans, but also helps them to do this more quickly and economically. This translates into faster loan approvals.

Until recently, there was little visibility and transparency with regards to the loan approval process and the elements that loan providers used to evaluate your loan application. Since, CIBIL has made your credits score and CIR available to you; you will be able to see how valuable a customer you are to loan providers.

You may notice that your Account/s Information may not be updated for your most recent payment. This will usually be the case if you have purchased your CIR within 45 days of making a payment. Credit institutions report information to the CIBIL on a monthly basis, which would mean that latest payment will not reflect on your CIR immediately. And what if your information of payment does not reach CIBIL at all? You are in trouble when you apply for loan.

In the cases mentioned above that is what exactly must have happened. It is our duty to resolve the issue and apply for CIR one month after that. Many of us don’t know this.  In Sunil’s case also, though he thought the ECS issue is over it might have not been registered with CIBIL. Let me tell you one thing. Sometimes when you negotiate for the outstanding amount and arrive to a settlement; it may affect your credit score. Because out of 50000 if the settlement is done for 40000, 10000 is shown as unsettled amount in CIR. Also, many of us have habit of calling the loan providers to know the interest rates or to know the eligibility etc. If it happens many times it is reported as if a person not strong enough as a credit worthy one. He/she is considered as not a decision maker for availing a loan or not a serious candidate for the loan providers. If the call comes to you from various loan providers no issues. Hence your frequent casual enquires to the loan providers also can reduce your credit score. Do you know that you may not get your new job you have applied for if your CIR is not healthy enough?

There are service providers for cleansing your credit rating status. They help you systematically take up the issues with relevant documentations and ensure that your credit ratio is raised to an acceptable level by the loan providers.

So do not sit on the dispute. Take appropriate action. Resolve it and get your CIR updated.

There are certain excerpts taken from CIBIL website.