Repair your Credit Information Report (CIR)!

Your credit information report plays a major part in your loan application process. And also remember that you cannot improve your report overnight. A bad credit history decreases your chances of getting loans. Before we go into the details, here are some facts you should know: –

• A credit repair company cannot remove or change any information in your CIBIL report directly.

• A Credit Repair Company will usually ensure confidentiality of your CIR.

• You can always opt for CIBIL’s online resolution process free of charge.

• Only the respective bank or financial institution can make changes in your credit report, credit repair companies facilitate this process.

There are two major reasons why your CIR can be bad.

1. Inaccurate information

2. And defaults in payments

For 1, In case the information is incorrect, then you can initiate the resolution with us. And if your bank confirms that the information is right then CIBIL cannot do anything. It is always better to first get in touch with your respective bank to correct any information.

For 2, if you have many unpaid or late repayments of debts and EMIs and credit card bills then it is entirely your fault. In case you faced financial crisis which caused you not to repay fullyin the past, then make it a point to repay your pending dues once your finances are stable.

If you have relocated and your credit card bills are reaching the previous address and you aren’t aware of it, there is a chance you might miss paying by the due date. In that case, always keep email and text options open for your banks. Everything happens on the phone these days, so it is good on your part to have alerts coming to your email address and mobile numbers. In this way, you can at least be in sync with all your repayments of credit cards.

Terms and conditions are something a lot of us ignore. But before taking a loan or credit card, read carefully. They don’t just write terms and conditions for formality. It is important to go through them once before you confirm. You may need a magnifying glass to read the fine print though, but make an attempt to do so as you will realise the importance of these clauses only when you feel you are being overcharged.

In case you have missed payments because you forgot them or thought it was fine to delay by one or two weeks, then you are at major loss. Paying your lenders on time is important for your credit score to remain healthy and to get your loan application sanctioned. When people opt for home loans, a credit score of 600 score is considered poor. So, if you need a large loan, you will not be able to obtain it due to your carelessness of maintaining a poor financial credit history.

These are the two major issues that can spoil your CIR. But thanks to the credit score repair companies who come to our rescue. But if you are not careful about your credit account repayment history, then they cannot help you in that!

What are credit scores?

Not many of us are enlightened with all the details regarding an individual’s credit score in India. In simple terms, a credit score is a numerical value based on the analysis of a person’s credit records that represent his or her creditworthiness. These scores are computed by credit bureaus with the data sourced from lending institutions.

In India, four companies determine the credit score, out of which the CIBIL score is the most popular. This is a 3-digit number which shows a summary of one person’s credit history and rating. This score can be from 300 to 900 (the latter is the best score). While some people do not have any credit history and so their score will be -1. In case the credit history is less than six months then your score will be zero. It can take up to 6 months to build your first credit score.

An individual’s credit score in India is computed by CIBIL, Experian, Equifax and Highmark.
Many of you are wondering what went wrong with your credit score, here are some factors that impact your credit scores: –

1. Payment history: – This is one of the factors that can impact your score. This factor accounts 35% approx. of your total score. A late record of payment in your current and past credit account will lower the score. Be consistent about making any payments on time and make a positive impact on your score.

2. The public records: – Public records matter. These include bankruptcies, judgments and collection items can lessen your score value. Be aware since sometimes you cannot avoid them.

3. The length of your history: – We mean credit history. The longer your credit history is the better it is. In some cases, it can increase and have a positive impact on the credit score. Credit history determines around 15% of your score.

4. Inquiries: – Whenever another person gets your credit report like a lender, landlord, an insurer, a number of inquiries can have a negative impact. Your new credit accounts and inquiries make up approx. 10% of your score.

5. Too many accounts: – Shut all the extra unwanted accounts which you have opened and probably forgotten about. This makes up around 10% of your score. So why do you want to lose even 10% of your credit score. It is essential. Also, closing an account will not remove all negative repayment records. So, if you have been paying up your loan account or credit card irregularly, then it reflects badly on your credit report. The bank will not erase all the evidence. That’s why maintaining a good credit repayment history is extremely important.

Follow few basic phases to increase your creditworthiness. Why lower it by being irregular? Some people think their age makes an impact or difference to the score; let us tell you that it is not going to change your credit score at all.

With a better score, you will be seen creditworthy to be offered many services with bigger loans and higher credit card values. Get faster loan approvals with an incredible credit score!

Bankers’ role in your credit score

Most common people in India have the following misconceptions ingrained in their mind when it comes to the determination of their CIBIL credit score:

• If I have a very good income, there is no way my credit score can be less.

• I have never borrowed in my entire life therefore I would be one of the safest risks for a bank.

• CIBIL is the organization that decides who gets what credit score but banks do not.

• CIBIL credit score is important but there are ways of getting a loan or credit card without it too.

• I checked my credit score 5 years back and it was 800. Since then, I have not made any major financial changes so my score will remain the same or would have improved.

If you are one of them who agree to one or more of the above statements, then you would be surprised to know that ALL of them are incorrect, at least partially!

A person’s credit score depends on a number of factors, two of which are your income and the repayment pattern to maintain for all your loan and credit card accounts. There are however several other factors that make a difference to your score. But at the end of the day, it is your banker who will make or break your financial security because your bank reports information to CIBIL based on which you are allocated a credit score.

A banker’s duty

Recently, the Reserve Bank of India issued a circular to all banks across the country to update their customers’ information on a regular, complete and correct basis to Credit Information Companies (CICs). The reason behind this is that there have many disputes and complaints lodged by consumers with CIBIL and the consumer forum because they have found many errors in their credit report. Most of these errors were because banks failed to update their records correctly with the CIC.

India is a country with a vast population. And the number of people taking loans and credit cards is also increasing, thanks to the improvement in the spending capacity of the people. Therefore, there is a humungous amount of data that CICs need to collate, review, record and then provide scores based on them. But if the banks report information incorrectly, they would not be aware of the discrepancies and end up giving incorrect scores to people.

A bank must report several things to CIBIL, some of which are:

1. Details of the applicant who has applied to them for a loan or credit card and the amount required
2. Details of account opening and closing dates
3. If payments were made on time or were there any delays. If there were delays, how late were the payments?
4. What is the credit made available to the borrowers?
5. If a borrower has not paid the full sum required but has made a settlement, details of the settlement are recorded with CIBIL.

As there are so many details they have to provide, the scope for making errors also increases a lot making it difficult for people who suffer from the misfortune of having been reported incorrectly to CIBIL. Credit repair agencies play a very vital role in getting these errors corrected thereby improving the scores substantially.

Understanding how CIBIL works, better

If you are one of those who still are unfamiliar with what or who CIBIL is, it’s time you do so with haste! India, like many other European countries and the USA, has been using a person’s credit score to determine if he/she is eligible to get any form of credit – loan or credit card. Many top corporations are including a credit check as a part of their background verification process. Insurance companies and mobile service providers are also in talks with SEBI, RBI and CIBIL to use these scores and credit history for their approval procedure. In short, a healthy credit score is something one MUST have in order to secure their finances and get them at good deals. And the primary organization in India that maintains and allocates these scores is CIBIL – the Credit Information Bureau (India) Ltd, also known as a Credit Information Company.

CIBIL credit scores are three digit numbers that may lie anywhere in the range of 300 to 900. The higher your score, the lesser financial risk you are in the eyes of lending institutions. Here are a few facts about CIBIL and how it operates for you to remember:

1. How does CIBIL provide the scores?

2. CIBIL is provided data by the banks and lending institutions which are its members. The data consists of details about the type of credit, size of it, the payment pattern, when accounts are opened or closed and when customers make enquiries about getting a credit. All these details are then analysed and accordingly a score is allocated to an individual. The scores and the client details are then sent in the form of a credit information report (CIR).

3. Are credit scores mandatory?

4. Yes, more and more institutions are registering with CIBIL and depend on the scores they generate along with the client application and forms to make a decision about providing a credit card even with a limit as low as INR 30,000. So, it’s not just how much you earn and the company you work in that makes a difference. Your credit score is also very important.

5. What do I do if my score is low?

6. Low scores result in complete cancellation of credit applications or approval but with not-so-favourable terms. If your score is less than 650, you have low chances of getting any form of credit. Some simple steps such as making payments on time, maintaining as small balances as possible on credit cards, watching the number of credit enquiries you make and keeping a tab on your credit score from time to time will certainly make a lot of difference to your score in a short time. For more complicated issues, there are several qualified credit score repair agencies whom you can contact.

CIBIL and many other organizations have conducted several awareness and informative campaigns to make everyone aware of their policies and the importance of having good scores. There are several reference materials you can get from your bank and online if you are interested in knowing more on this topic.