CIBIL and your CIR

 Before a bank/other financial institute extends a loan to you,a potential borrower, it needs to take a decision on whether you would be able to repay the interest and principal or default and how much  risk is involved in lending money to you.Banks rely on many factors to take this decision on your credit-worthiness – including your income and household income , your other loans and EMIs, your previous repayment history and defaults if any, etc.In the past, the banks had to collect all this information from you before analyzing it. But now, they have a readily available tool to make this decision simpler for them – your credit history in the form of  your Credit Information Report (CIR).

In India, the Credit Information Report is created and maintained by a company called Credit Information Bureau (India) Limited, or CIBIL.The Credit Information Report is a compilation of your repayment history.CIBIL was promoted primarily by State bank of India (SBI) and HDFC. Now, most banks, financial institutions, non-banking financial companies, housing finance companies and credit card companies are its members, and regularly provide it with data about borrowers.

The CIBIL Credit Report includes the following information:

• Basic information about you like your name, address, identification numbers (PAN number, passport number, voters number, telephone number, etc) and date of birth
• Records of all the loans availed by you
• Your past payment history
• Any amount overdue
• Number of inquiries made on you by different members of CIBIL (how many banks financial institutions have checked your credit history)
• Suit filed status

The CIR does not contain:

• Your income details
• Amount(s) deposited by you with the banks
• Details of your assets
• Details of your investment(s)

The Credit Information Report only provides factual credit information to banks and financial institutions.It does not contain any opinion about whether a loan should be granted or not. The banks take this decision themselves, and the credit report only facilitates this decision.Different banks have different rules for lending on the basis of a CIR so being rejected by one bank for a loan doesn’t mean another one won’t lend you the money.

Maintaining a good repayment record is a great idea as it helps when negotiating for a new loan, both of the consumer and business variety.However aside from being prompt with your repayments , it’s important you go a bit further to ensure you keep your Credit Information Report in good order:

Ensure information about your credit history is updated: For example, you might have defaulted on a sum of money, say Rs 12,000 but repaid the sum later, maybe well past the due date for the payment. There could be instances where CIBIL did not get the updated info for its records. This will show up as a default and will affect the calculation of a good credit score.

Check for confusion of names: There can be thousands of names that are similar in the CIBIL database. Things can go haywire if a person who shares your name has defaulted and all his defaults get recorded in your file.There was this one instance, which a loan applicant reported. Her name, Anju Jadeja, was confused with Anjum Taneja. Turns out Anjum Taneja passed away tragically in a freak accident, with nobody able to identify her until bank authorities decided to investigate the applicant after CIBIL corrected and ratified Anju Jadeja’s credit report.Till that point in time, the bank had put down Anjum’s bouncing cheques, as defaults on loan payments in Anju’s credit report. Today, Anju is a relieved woman.

Guard against human input error: The information that goes from the banks to CIBIL on a loan or credit card payment default may have been erroneous due to a simple input error by one of the bank employees.There was this instance when there was an accidental default of a month overdue payment of Rs 18,000 of one Tanushree Omkar. She cleared it the next month. However, the record that went to CIBI, had two additional zeroes, which made the default amount to Rs 18 lakh (Rs 1.8 million)!

Beware of  identity theft: This is the most serious of all causes of errors and can have a disastrous impact on a person’s credit profile.In recent times, identity thefts are on the rise. Right from a petty shopkeeper who swipes your card several times to sneak in an unofficial payment, to a terrorist who wants to access a billionaire’s account in a remote corner of the world, identity theft is becoming a serious crime that needs to be checked.If you are a victim of identity theft, like Anupam Shekar was, then it is time to get your financial log in order. Keep track of all the cards that you use or do not use. In Anupam’s case, an impostor had captured his PAN card details using a clever ploy. Anupam recalled that someone had wanted to deliver a mail from his local bank only on the basis of identification and had been examining the PAN card given with great curiosity.It was then that it struck him that anyone could access his mailbox in the huge apartment complex he resided in. The impostor then went on to open an account with a bank entering all the details he had gathered on Anupam by accessing his mailbox. Anupam did not know for a long time about this until he decided to apply for a new credit card and his bank rejected him outright, labelling him a defaulter. Anupam had to go to great lengths, spending precious time and energy, to clear his name.Apparently, the impostor had directed all bank communication to another address, got a credit card on that account and spent indiscriminately until the card was locked by the bank due to several defaults on repayment.The account was frozen but the impostor walked away scot-free to scout for his next victim, but not before Anupam Shekar’s credit report was tarnished beyond repair.

If having a good credit history is really important to you,or you plan on applying for a loan or credit card soon,here is the link to help you get hold of your CIR and check that all particulars are in order and if not get them corrected: https://www.cibil.com/d2c/.