With most of us opting for loans to fund our home, car or other purchases, the credit information bureau, CIBIL can play a big role in our finances. A few FAQs.
What does the advent of CIBIL Credit Information Reports or CIRs in India mean for me as an individual?
The biggest change that the advent of CIBIL credit reports in India brings is making your payment history available to a lender, when you apply for a new credit facility. So, how does this bring about a big change?
Well, previously lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would get charged the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all borrowers, in order to compensate for the possible default of a small portion of the loans disbursed. In other words, it's a college professor (the lender) punishing an entire class of students (borrowers) for the mischief played by a few (defaulters).
Today, CIBIL credit reports provide lenders the ability to differentiate between those who have honoured their obligations responsibly and those who have defaulted. Individuals who have appropriately manage their obligations build ‘reputational collateral' with lenders. In turn, this reputational collateral allows individuals to negotiate better terms with a lender. Hence, prior to commencing your loan hunt, it is advisable to purchase and review your CIBIL report. It helps you understand what the lender will review while evaluating your application. Secondly, to identify and rectify any discrepancies that you may find on your CIBIL CIR and hence, prevent any wrinkles during the loan evaluation process.
How can I obtain my own CIBIL report?
CIBIL provides individuals access to their Reports for a nominal fee. What they require is an identity proof copy (PAN Card, Passport, Voter's ID), address proof copy (Bank Statement, Electricity Bill, Telephone Bill) and payment (Demand Draft or On-line payment). The application can be mailed, or couriered to addresses present on the CIBIL website.
What should I do when I spot a mistake on my CIBIL credit report?
Typically, you check your CIBIL report when your loan gets rejected and the lender tells you it's because of some information on your CIBIL report. But there is no need to panic! Mistakes on a CIBIL report can be easily corrected with the help of the credit bureau. All you need to do is:
Purchase your own CIBIL report
Identify the erroneous information
Provide name, address, date of birth, an Enquiry Control Number (ECN) and the nature of the error on CIBIL's website. This is known as a ‘Dispute Request' in credit bureau parlance.
The ECN is a unique 9-digit number found on the top right hand side of your CIBIL credit report and is generated every time a credit report is generated. It is very important to provide this number to the bureau, as it helps identify the CIBIL report on which you would like to ‘dispute' information.
What does CIBIL do once I raise a “Dispute Request”?
Once you have raised a “Dispute Request”, CIBIL checks whether all the requisite details have been provided. The request is then routed to the CIBIL Dispute Resolution Department for analysis. This is because one type of dispute request can be resolved by CIBIL itself. If CIBIL is unable to resolve the request, it is routed to the relevant lender.
Once the lender confirms that there is an error it will provide the CIBIL with corrected data. CIBIL then updates the data and informs you as appropriate. Always remember, it's the duty of CIBIL to help you resolve your request.
(The author is Senior Vice President – Consumer Relations at CIBIL and can be reached at >creditwise@cibil.com )