The RBI recently directed all credit institutions to provide one base level consumer credit information report (CIR) free of cost every year to individuals whose credit history is available with them, with effect from January 1, 2017. This was a long time demand as CIBIL, the institution which maintains this score for individual only shared credit information to it members or you could get it only by paying fees. But now one report is free from Jan 1.
Should you be checking your free report?
Yes, the reason behind RBI giving this facility is to make you aware of the nitty-gritty involved in loans and debt. We all know CREDIT SCORE is useful in availing loan for any major purchase like a car or house on loan.
But a lot of time, the score shocks the individuals especially the first time loan is availed. When a customer has identified a new car or a house or require money for education or marriage, and loan application gets rejected… all dreams come shattering down.
Let me tell you how people do not understand the value of good credit score. Some time ago at a party, one of the game prizes that was given away was for the highest number of credit cards that a person held. The winner of the game had 22 credit cards in his bulging wallet – obviously, he did not know about how many credit cards he should have had or how credit card debt works. This story is not to give you advice about managing your credit cards but a more intrinsic matter – the importance of maintaining a good credit score.
If your financials are good and your loan is rejected because of CIBIL score, there could be 2 main reasons:
- Data not updated or captured erroneously: You may have delayed a payment or have settled with a credit card company but the data is still not reflecting or partially been added to your profile. Hence your score will have a negative impact.
- Identity Theft: Some other person has used your documents to get the loan. And since he is an imposter, he would have defaulted. And since it is in your name, your CIBIL score will reflect that adversely in terms of bad credit history.
Hence, now since you have a free report you should be doing following things:
1) Check your score regularly. You should aim to increase the score every year. You can increase it by focusing the positives and negatives mentioned here:
How CIBIL score is impacted?
Positively By:
- Paying bills/EMIs/Minimum dues on time.
- Keeping balances low (using prepayment).
- Maintaining a credit mix. Using many credit cards or frequent availing personal loan should be avoided.
Negatively by:
- Not paying dues/EMIs on time. Defaulting payments or loan in partial.
- Creating an impression of being “credit needy” by filling multiple proposals/loan inquiries.
- Not closing credit card or loan accounts cautiously without settling all dues/penalty/charges etc.
2) Checking for Identity Theft: This kind of theft is increasing. This simply means that some other person uses your documents to avail a loan with an intention to default, as he knows he will not be caught. If you find a loan or a credit card or even an inquiry in your report which you have not made, immediately bring that entry to the attention of the company who made it. Make a formal complaint. When you prove your innocence the CIBIL is intimated and your score is normalized.
3) Check for Data Errors: Check the data in the report as your credit data is reported on a monthly In case you fund any discrepancy, immediately contact the loan company and tell them to rectify and send the correct report to CIBIL.
Your AIM
Whatever your score is, try to increase it and maintain it over 800. That’s an ideal zone. This is my score:
How is discrepancy rectified in your report?
Keeping your CIBIL score and details is very important even if you are not taking a loan right now. It is advisable to check your score, personal details (name, address etc). in case you find an error, you should immediately follow the procedure laid to resolve the dispute.
CIBIL only takes request from individuals or customers for rectification of records, if they have issued the report. If the report is from a member, you need to approach the member for resolution, and the member can take it up with CIBIL. It follows the system of dispute resolution. In case you find a wrong fact, post the dispute online on the bureau website. The query goes through the process by the Dispute Resolution Department for analysis. Certain dispute fall in a preview of the bureau, but query related to errors in balances or obligation are sent to the respective loan provider. Based on the information received the score and the report is modified. Normally it takes 30 days to resolve such issues subject to the other parties responding on time.
So just wait till 1 Jan 2017, and do avail your free report and take actions as required.
Follow Up Addition to this Article on 25/02/2017: The free report is now available and you can click this link to get your CIBIL Score Free.
Share your views in the comments section.
Hi,
Great article. I also want to get a credit card but cibil score scares me. This is because I have heard that non payment in credit cards due to any reason also lowers down your cibil score. Is that true?
Dear Dr Seema… This is true that non- payment or delay payments towards credit card deteriorate the CIBIL Score. Hence credit card must be used judiciously. But this does not mean that you should not have a credit card. It is a necessity and can be rewarding if used properly. We have written on this topic also on our website. Just go through the articles on credit card and debt management. If it helps the score mentioned in the article is mine and I have been using 2 credit cards since last 11 years.
Thank you so much for the suggestion Mr. Madhupam. I will definitely act on it. I am also constantly reading about cibil score because increasing it is has become immensely important for me. I read many blogs and found http://www.loankuber.com/content/cibil-score/ to be very beneficial. It has a section just dedicated to cibil score. Thought it would help other people like me too. 🙂