With the ease in the availability of credit, many customers are in the assumption that they can get a loan as and when they require. Although this thought is partially true, it is not always the case. The Reserve Bank of India (RBI) has initiated a lot of mechanisms that have halted the number of defaulters that were on a rise in India. One such mechanism is the introduction of Credit Information Bureau of India Ltd (CIBIL). The CIBIL is one such mechanism by which banks can analyze who can be potential good customers and who are not.
When you apply for a loan, banks will approach the CIBIL and get their hands on your Credit Information Report (CIR). This report will elaborately mention the details of your credit history as to what you’re your credit transactions in the past etc. Apart from that the report will also mention your credit status since the report will rate your credibility in the range of 300-900 points. If you are rated as 300 points it would only mean that you have been a reckless borrower and you haven’t been disciplined when it comes to repayment of the loans that you had borrowed previously, whereas a score of 900 will make you a most wanted borrower by banks.
Almost all banking and Non- Banking Financial Institutions (NBFCs), utilize these scores for considering your loan application positively. In such a scenario it is binding upon you to hold a recent copy of your CIR and get a complete understanding as to where you stand and what can be done in order to get things rectified. Having this knowledge beforehand will enable you to prepare for a good debating session with your bank if there is a reason to believe that your application may not be approved due to the inconsistencies in your credit report.
How can you get to know your score?
It is simple; all you need to do is approach CIBIL and ask first for your Credit Information Report (CIR). The next step will be to get your credit score. For this you will need to carry along your CIR and approach CIBIL with Rs 450. This payment can be made either through a demand draft or by paying online. Once done, you need to carry along all the required documents- Application form, demand draft or online payment form, identity proof and your address proof.
Once you have submitted all the required documents, you will be receiving your credit score. What you need to know is that it is important to review the credit score first by you so that you can get a comprehensive understanding about your credit score.
What are the Score’s attributes?
Following are the important attributes that will predict your Credit Score:
CREDIT UTILISATION:
What is the amount of credit the customer has utilized the credit in the past, if any, and how much credit is the customer using at present?
DEFAULTING:
If the customer is having more than one account on which the loans have been taken, how many accounts have defaulted by how much and by how many days?
NUMBER OF INQUIRIES:
Up until now did you apply for any additional credit lines?
TRADE ATTRIBUTES:
Under this factor information relating to the customer’s lines of credit, type of credit that is being utilized currently, the ratio of your account as in the is the amount you most often utilize for repaying your requirements either by cash or only depend on credit cards.
EMIS:
Details regarding whether or not you pay your loan EMIs on time.
CREDIT CARD:
Credit card is known as revolving credit. Therefore it is imperative to maintain a good credit score at all times since it is very easy to default on them due to their minimum balance payment.
CREDIT EXPOSURE:
Before you apply for any loan or a credit card, first ensure that if you actually need it or not. Depending upon other alternatives you can either choose or not depending on the non-availability of other option sot raise funds.
REPAYING DEBT:
If in case you have any past debts, make sure you repay them as soon as possible before accumulating a huge pool of credit wherein it might get difficult to pay back.
Remember:
It is important for you to maintain a good credit record in order to enjoy speedy acceptance of your credit requirements. But make sure if you absolutely need debt to solve your financial requirements or there is any other way by which you can raise finances.