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Now lenders are well equipped!

Credit report

Basha Shaikh

19 Mar 2008

Payment default? Lenders now know...

Yes, we really mean it.

With the establishment of credit bureau like Credit Information Bureau (India) Limited (CIBIL), now potential lenders have easy access to information regarding your borrowing and loan repayment patterns. So better watch out, your loan installment and credit card payment details etc. are trackable now.

CIBIL have access to almost all the relevant information about you including contact details and financial details. Based on this, these entities generate 'Credit Report' of an individual.

What is a credit report?

A credit report is a document which records details regarding loans taken in the past, the loan repayment, defaults, write-offs and settlements if any besides contact details. This is also known as 'Credit history'.

Lenders such as banks, financial institutions or non banking finance companies have access to these reports.

Vital for creditworthiness

A credit report plays a vital role in determining your creditworthiness.
As lenders have access to this credit report thus their decision to
lend or act otherwise depends on this report.

If you have a sound loan repayment track record, it is likely that you
get a loan easily. Moreover, you may also get the privilege of
getting an enviable deal.

But, if you have defaulted on your loan repayments or credit card
dues; you will find it difficult to get a loan.

Am I on the list?

There is no way to know whether your name is on the
defaulter's list maintained by these credit rating agencies. If your
loan or credit card application gets rejected with apparently
everything in place; its time to probe. In case your name figures in
the list, banks will give you the requisite information.

Can I get a copy of the report?

Yes, you can get the copy of your credit report. The Credit
Information Companies Regulation Act, 2005 (CICRA) gives you-
the consumer, right to ask for a copy of your credit report.
In case of CIBIL, you can demand a copy of the report from them.
The regulations of CICRA require that the credit bureau itself provides
you with the report on payment of the specified fee and after
establishing your identity.

But it has not come into force as yet. But once, the provision for
the Act is in effect, you can directly get a copy of your credit report
from CIBIL.

Till then, don't despair!

What you can do is, apply for a credit card from any of the issuing banks. If the concerned bank approves your credit card then it means that, your credit report is fine, as banks always analyze your credit report received from CIBIL before issuing you any type of credit facility. However, if the bank rejects your credit card then there may be some flaw in your credit report. Hence, one can ask a copy of the credit report from the bank. If the bank denies, giving your credit report, you can complain to CIBIL as well as to the banking ombudsman. CIBIL's own rules require that the bank shares the details of your credit report if they have rejected a loan application based on a credit report from CIBIL.

Not the end, just another beginning...

In case of your name appearing in the credit bureau's defaulter's list,
you will face difficulties in getting a loan or a credit card. Elsewhere
in the world, in a similar situation, you may get loan from the lenders
which specialize in lending to people who have just come out of
a bad credit situation.

In India, such a class of lenders has not yet emerged. So if you
want to take another loan, try to improve your credit history by
taking secured loans (such as a credit card against fixed deposit,
loan against financial/real estate securities and jewellery etc.).

Once your credit history is rebuilt, you may be eligible for regular
credit, albeit at a higher cost.