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!

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.

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.