Date: January 6, 2014
Know What is CIBIL and how is it Calculated. How to get Free CIBIL Score including a Good or Bad Score. How to Improve Credit Rating of an Individual or Company
CIBIL is an Autonomous Body whose full form is Credit Information Bureau (India) Limited. The Credit Score is gaining importance as any person having any kind of loan (Personal Loan, Home Loan, Car Loan, Two Wheeler Loan, Business Loan etc) or credit card or Overdraft Limit or even Inquiries with Financial Institutions for taking loan or even acting as guarantor or co-applicant - has all its details captured in the loan report
CIBIL score signifies that how well have you repaid your previous loans and credit card obligations in the past basis which you get a score. CIBIL match signifies your repayment pattern - i.e how many loans have you taken from what time period of opening to close. Have you made any settlements and if any bounces or delayed payments are there then in how many days have you cleared that outstanding payment.
The Credit Report is generated basis 4 Details :-
» PAN Number. Date of Birth as per PAN Number. Name as in PAN & Local Residence Address
All Banks, Financial Institutions share data of borrowers repayment track record with CIBIL. CIBIL then stores a database basis Applicant Name, PAN Number, Date of Birth and Address along with repayment behavior. Even if a person changes his Address - still the data matches with Applicant Name & Pan number
There are 2 ways to check Credit Score, with a Free way to check CIBIL Score too
a) Visiting CIBIL Official Site, completing there request form, making online payment of Rs. 470 as charges for generating your Credit Report, post which you need to authenticate details by submitting some personal information related to PAN Number, Address, Pin code, Loans Taken etc and you can get your Online Credit Report in couple of minutes.
However, if the information furnished becomes mis-match - you need to courier in the copy of your PAN and latest address proof along with Payment acknowledgement ID to there correspondence address in Mumbai and they will send you the hard copy of report post receipt of details.
b) Another way (though not recommended for Free CIBIL Score) is you can put a loan application in Bank. If the loan application passed on or gets thru - you can safely consider your application or credit rating well in norms (Banks do not charge any processing fees for submitting a car loan application). If, however - there is an issue or a problem in your Credit report - you can get intimation from respective bank for seeking further clarification or even rejection. Through this process - you may though not get to know about your exact Score or Rating, but what you can surely know is - whether your Credit Rating is meeting norms of bank for lending or not and what is the issue like. This may not charge you a single penny. (Caution - Do not put multiple application as it will start showing in CIBIL that you are seeking loan from multiple banks and may hinder your borrowing capacity)
A Banker can determine your CIBIL Rating by following the basic general guideline for a Good or Bad CIBIL Score
« Score of -1 - Insufficient history to determine your Credit Rating. Generally the first time takers
« Less than 600 - Bad Credit History. In Bank Definition, high Probability of been called as Defaulter. Need to Re-work completely by understanding Profile, Income Level, Past Repayments to increase Credit Score.
« Between 600 - 720 - Below Average CIBIL Score, Certain Payments were delayed for long. On Verge of Entering into Defaulter Zone
« Between 720 - 740 - Average Credit Rating. Do not apply too frequently to fall below 720. Make your payments on time to come ahead of 740 Score.
« Above 740 - 760 - Good Credit Rating.
« Above 760 - Excellent Credit Rating
* - Basis Writer Experience and Personal Judgement
Note:- Credit Report is Internal Report of Bank on which they score applicants on Positives and Deviations. Like CIBIL Score, Field Verification Reports, Income Eligibility, Bank Statement Average Balance and Previous Relationship or any other factor to assess the profile of the Applicant.
While CIBIL only reflects a scoring basis the repayment track track record on Secured and Unsecured Loans. It does not consider Income, Eligibility or Verification reports in any sense.
Keep yourself in shoes of banker and know what more details one need :-
- Reason of Default - was it intentional, financial or some dispute with the bank
- Were bounces were regular or only for specific period - The Banker would like to extract details of your repayment loan track record basis the report. Were the loan EMI's been bounced regularly or only for a specific period
- Time Taken to Repay the Instalments - how much Time taken by you to clear off your bounced installments
- Settlement Reason - Cause of settlement and amount. Which product you had settlement into. If its a Car Loan, Home Loan or Personal Loan - it has a much bigger impact compared to a credit card settlement
- Other Loan Details - If the issue due to which default has happened and caused bad cibil score - do you have ever taken any other loan apart from it previously. If yes, hows the repayment track record of that loan
Keeping above factors into consideration - if you had a bad Score but due to circumstance - you can put your point with the Banker - its possible that with collateral basis FD of close to 70% of loan amount or with a Guarantor with 50% of FD Amount - Bank can give you an opportunity to take a loan and improve your bad credit by making timely payments
If there is a dispute with a Bank or Financial Institution - you can still relax as, if you have documentary proof with communication details - you can furnish these documents to your prospective lender and can prove that issue has happened from Financial Institution end. Also, you can simultaneously pursure your case against erring Bank with the Banking Ombudsman - which is Judicial Authority appointed by RBI for benefit of consumers to file there cases against erring banks.
If it was an Intentional default - then am not sure how you will likely to gte fund - But you can contact Private Lenders - if get a chance to get loan - who charge 24%-40% ROI with a guarantor
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