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.

Let your credit card help your credit

Applying for and getting a credit card is considered quite easy now-a-days. You may have heard many of your friends and acquaintances getting several calls and online offers for credit cards with attractive reward points and cash back benefits. You may have got a few of them yourself. But did you know that credit cards are not only helpful to spend when you don’t have ready cash or a balance in your salary or savings accounts, but they also help in growth of your CIBIL credit score?

How does one qualify for a card?

Just because you have got an offer (some like to call if a pre-approved credit card), it does not mean you will certainly get the card when you apply for it. Just like any other credit such as vehicle or education loans, you must submit an application and provide adequate documentary evidence such as your ID and address proofs and your employment details. The three main criteria lending institutions look for are, firstly, your ability to repay the requested debt (IT returns or Form-16), secondly, what is the value of the collateral (say, a fixed deposit) you are offering for this instance of debt, and thirdly, the most important criterion today for banks is your willingness to repay – that is verified by analysing your credit history and your 3-digit credit score. When your credit score and other loan eligibility documents are all satisfactory, you get a credit card approval. The credit limit and card terms also largely depend on your credit history. CIBIL credit scores can range anywhere between 300 and 900, scores above 750 being preferred by 80% of banks today.

How does a card help your credit?

Coming to the main topic, let us see how a credit card can help you with your scores:

1. Provided you make your monthly payments for your cards on time, whether it is the minimum payment or the whole balance, your credit score will improve.

2. If you keep the outstanding balance of all your credit cards less than 30% of the combined credit limit, banks consider this to be an excellent balancing of debts and incomes and this also improves your credit score.

3. If you have credit card accounts which have been active for a long time and on which you have been making regular, timely payments, do not cancel such accounts. These contribute to a large extent in keeping your scores high.

4. Before you apply for a credit card, think if it is really necessary. If you already have 2-3 cards, it is not advisable you apply for another credit card. If you have too many such cards, banks may consider you to be a slightly higher risk than usual and will deny you a loan in future. So to get a card which you don’t really need, you are giving up your chances to qualify for a much more important loan when the need for it actually arises.

5. Provided you monitor your credit scores and credit report regularly, you will know exactly what the status of your credit cards and their balance are in terms of improving or deteriorating your credit score. If you find any information about your card that has not been updated correctly by your bank, you should approach the bank and CIBIL to get this rectified immediately.

Using your credit scores wisely is a very wise move for your month-to-month finances as well as your long-term credit reputation. So start handling your credit cards with care today!

Why a good credit score matters

Two close friends of almost equal, present financial standing applied for a home loan with the same bank. While one got an approval letter within a week, the other was still waiting for hers a month after the application. There may be many of you who can empathise with the second friend because you have gone through this or something worse yourself. Most people apply for a loan to fulfil a dream, and it is indeed painful when the dreams turn futile. So, it is very important you know what a credit score is, who credit rating agencies are and why they make a difference in everyone’s lives.

Credit rating agency – The most popular of such agencies in India is CIBL. This agency collects payment information of millions of people on a regular basis and stores them in a confidential manner. Banks which are registered with CIBIL pass details about the number of loans or credit cards a person has, the number of times a person applies for a line of credit, payment pattern of a person, spending habits, ratio of debt to income of an individual, number of late payments made and by how many days were they late, if a person was ever declared bankrupt, employment and residence information and much, much more.

Credit score – Using the information collected from trusted sources, the credit rating agency maintains a report, like a financial evaluation report of a person which can be obtained only by that person to whom the report relates to and registered members of CIBIL, for a small fee. CIBIL also awards a 3 digit score to a person based on his/her financial report. The score can range anywhere between 300 and 900. Higher the score, the more credit worthy you are considered.

Why are they important

India is a country dominated by youth – youth that are becoming more skilled which leads to more employment and more spending power in their hands. It is also one of the fastest growing economies in the world. Naturally, the number of people applying for lines of credit, be it a home loan, personal loan, auto loan or credit card, is on the rise. Doesn’t this seem like fertile land for lending institutions? Here are a few reasons why they still heavily rely on credit scores and more than 10,000 enquiries are made of CIBIL on a daily basis by them:

1. The credit score is a clear indication of how well a person manages his finances. The score after all is awarded after CIBIL collects a lot of information and prepares a whole report on it. Banks would be happier to lend money to people who have a good sense of balancing their expenses against their incomes as that would imply their chances of getting their money back and earning interest is higher.
2. People may try to cover their past poor track records with various lenders or credit card issuers. Some people wilfully choose to default on their debts, especially with credit cards. To banks, the credit reports are bare-all tools that would not let anyone hide and take undue advantage of banks.
3. The reports also indicate if a person makes it a habit to live more on credit or make late payments, both of which ringing bells of alarm for bankers.

So remember, it is virtually impossible for you to now get a loan or card if you do not have a good credit score. It is important you get to know what yours is right away and work on improving it if it is not up-to-the mark.

The mechanics of a loan application

You have recently made an enquiry about getting a loan for a vehicle and have applied for a credit card simultaneously. You have never dealt with these formalities in the past and have usually relied on your father or friend to do so for you. Now, naturally, you are curious to know what exactly takes place behind the locked doors of a bank with your application! Here is a simple guide for you to know how a loan application is processed.

1. Documents and verification – The first step that any bank takes is to collect your basic information and the details of what kind of line of credit you require and for how long you need it. The common documents you need to submit are your ID and address proofs, 2-3 photographs, bank statements, salary slips and details of present and past employment. Banks send authorised representatives to carry out personal verification of your employment and residence thereafter.

2. Contact credit rating agencies – Once you have submitted all these documents and you have cleared the verification procedures, the bank will then contact the credit rating agencies in India to get you credit score and reports. This phase is equally important as the first because many loans have been declined at this stage. When your report arrives, the banker will carefully look at all the details, payment history, comments, past loans’ details, details of your income and expenses and many other factors and will then decide if you are eligible for a loan or not. Your credit report is your history with loans and cards in the past laid bare for future review. A score of 750 and above is generally considered good (the maximum score being 900). If your verification comes clear and your CIBIL score and report are clear, as well, 90% of your loan processing is done.

3. Approval or decline – Once these checks are done, the bank will either inform you about the reasons for your decline (some even send a copy of your credit report) or will invite you for further discussions about the loan that you require. If it is the former in your case, you should carefully review your credit report and understand the definition of credit rating and factors affecting it with the help of a credit advisory company. If you have maintained your finances well, then you can expect a good rate of interest and requested loan amount from your banker. Associated terms such as low fees and rewards are also included with customer with exceptionally high credit scores. So the better your score, the better a deal you get from your bank.

4. Loan closing and funding – As the name suggests, in this stage, you sign the final documents and retain the copy that is given to you while the bank retains their copy and informs the credit agencies about the start of the loan. The money is transferred to your loan account or you get your card, and thus begin the story of your new line of credit!

As you can see, credit scores and reports play a very important role in, no matter what kind of financial institution you approach for credit. So do make sure you know more about credit scores, preferably from a credit rating advisory agency.

Telecom payment details may get linked to credit scores

Mobile bill payments may become part of CIBIL’s evaluation

The credit rating analysis of CIBIL, India’s premier Credit Information Company, may soon involve lenders scrutinizing mobile phone bills’ payment details of customers to gain a better insight into their credit history. If you have carelessly defaulted on your mobile phone bill payments, your credit scores could suffer, and this would impact your chances of securing a bank loan or even a credit card.

Credit Information Bureau of India Ltd (CIBIL) assigns credit scores in the range of 300-900 to individuals along with providing them a detailed Credit Information Report of their credit history. The higher the credit score, the easier it is for a customer to borrow money from the lending institutions across the country. It is recorded that almost 80% of loans are sanctioned to those individuals who have a credit score of 750 and above.

Telecom, bank defaults have strong correlation

Top officials at such Credit Information Companies feel that the reason is not far to seek. Globally, there is a convincing correlation between telecom payment defaults and banking defaults, they say. By seeking details on telecom payments, insurance premium payments and other utility bills helps Credit Information Companies offer a comprehensive look at the consumer’s behavioral pattern with respect to credit which can forewarn lending institutions of the individual’s willingness to repay.

Looking at the mobile penetration in the country, sharing of telecom payment details ought to help improve credit profiling of consumers. Private telecom operators have been requesting CIBIL for years to get mobile phone payment details into the individual’s credit history to get the customer to realize the ramifications of defaulting on payments and also enable easier collection of dues.

CIBIL data used for deciding credit limit on post-paid connections

Telecom operators are presently using CIBIL’s credit score along with the client’s ability to repay to take a decision on post-paid limit for customers of mobile connections. When a customer applies for a post-paid connection, the operator enquires with CIBIL for his/her credit score along with their credit history based on the details provided in the customer’s application that also includes his/her income details. This is the basis that telecom companies use for evaluating the customer’s financial health and taking a decision on how much credit limit to offer to the applicant.

Top officials at CIBIL point to various World Bank surveys that indicate reporting of non-financial payment details such as telephone bills, insurance premium payments and electricity bill payment details can help banks take a call on money lending to an individual.

Still early days for telecom companies to share data

There are many benefits that could accrue after telecom operators start sharing data with credit agencies, such as better profiling of first time borrowers, but there is also a disadvantage that merely a telephone bill default could deprive an individual of a loan facility. Banks may definitely have to take a more cautious stance on telecom defaults while lending money. The permission to share data of telecom operators will take a little longer because of the regulatory hurdles but will have a big impact so far as credit profiling in the country is concerned.

Though telephone defaults are still a long way away from possibly impacting your chances of getting a loan, there are other areas where more caution is advised. For instance, applying for new loans should always be avoided as much as possible. Even the mix of credit you currently utilize can impact your chances of getting more loans. An ideal mix would be a home loan, a car loan and a credit card. The more the number of credit cards and higher their %utilization of credit limit, it would reduce the individual’s financial capability to repay fresh loans and this is hence viewed negatively by CIBIL.

Pass the test with these ideas

Meet the new number of financial security: 750. Yes, for most banks and financial institutions, this is a score that makes you a desirable borrower. And this score, has been generated by CIBIL is based on about 280 parameters. We are all trying to figure out ways to get that healthy score and make it easier for us to obtain credit.

The primary purpose of CIBIL is to help the banks exercise financial prudence to judge borrower loan applications and reduce risk of non-repayment which makes their profitability more predictable. It is the banks’ helping hand in the corporate world. So, proactively manage your credit health with professionals showing you the way. Read on.

• Credit Information Report: Credit History with a Credit Score

What CIBIL provides you and the financial institutions is your comprehensive credit history with a credit score. The banks do their analysis based on their internal policy and guidelines.

Now once you get a score, CIBIL’s work is done. Let’s say your score is not the perfect one, then what do you do? How do you repair the damage? The score is a one-time result at a given point of time, so what are the ways to improve the score over time? These will require professional analyses and without the best credit repair service, you will never be able to get the perfect score easily.

In case of errors

Banks and CIBIL being run by software developed by mortals sometimes have discrepancies in your credit information report. Once you get your credit information report, checking each and every part of the report is absolutely essential. Having a pair of professional eyes trained to spot every kind of discrepancy in the data will make the comprehensive verification process easy for you.

Tips on financial management

Over the years, some of us have developed an innate hatred towards Credit Cards. We prefer to carry the Debit Card and cash. Yet, using the Credit Card to your advantage can win you some brownie points with CIBIL, as well.

Timely and controlled Credit Card actions will show you favourably on your CIBIL report. Besides, carrying large amount of cash is never a good option. Banks do not report your Debit Card transactions but report your Credit Card payment transactions. Also, enjoy credit card discounts and cashbacks as major retail brands have partnerships with leading Credit Card institutions.

In this era of e-Banking, millions apply for financial assistance online. Along with credit reports, banks are relying on your social data to assess your financial status and capacity. Marker research giant, Euromonitor predicted that UK consumers will be spending more than 320 billion pound just by analysing their data on facebook. Without professionals helping you out, you will never know what else is affecting your credit score.

Get help from Credit Clear Management Consulting Services to improve your CIBIL score. Rely on them to correct any discrepancy and liaison with financial institutions for settling your debts.