Monday, 11 July 2016

CIBIL - Your Credit Score Keeper



In August 2000, on the recommendations of Siddiqui Committee, the CIBIL was formulated as one of its kind credit rating company. It is owned by the leading banks including State Bank of India, Bank of India, Indian Overseas Bank, Aditya Birla Trustee Company Pvt Ltd and many other banks. However, the major stakeholder remains the Trans Union International PLC, which is the leading global credit bureau player with stake of 77.1% (as mentioned on home website). Some of the other facts about are as follows:

What is the full form of CIBIL?

Full form for CIBIL is Credit Information Bureau (India) Limited

What does CIBIL do?

CIBIL records the credit information for all loan providers of all the loan consumers. Its help the money lenders (organized bunch) understand the applicant credit repayment history and capacity to take additional loan.

How does it function?

Member financial  institutions

CIBIL
Leading Companies
    Provide data regarding Loan & credit data of an individual
    Sends the information on monthly basis

  Stores the received data.
    Creates Credit Information Reports (CIR) based o the information received

    Ask for CIR reports from CIBIL  in case of sanction of any loan
    This  report helps to approve loan applications


CIBIL has many of its products (TransUnion Score & CIR) which help the loan providers make quicker decisions regarding the loan sanction from its applications. It is not the only factor for approval of any loan but it is a major one. In order to get a green nod for further loan processing, a minimum score of 750 (range of points: 300-900) credit points is required. If the score is satisfactory, then the income proof and other documents are called for verification.

Can you know your own CIBIL score?

CIBIL score can be received by an individual from the CIBIL company website. It is a simple process where few personal questions are asked to determine the authenticity of the applicant. On payment of nominal fees, the applicant receives his credit score in next 24 hours. It is similar to the score, CIBIL sends to your bank in case if you apply for loans.

What are the factors that affect my credit score?

Payment History – Your payment history affects your rating. This includes delay in payment of your EMIs, delayed credit card bill payment or default in any payment. Any default indicates failure in servicing future debts.

Increased Credit – It indicates additional credit repayment burden on the applicant. It also pressurises the existing cash flow payment.

Type of Loan- The nature of loan acquired in past affects your credibility. A personal loan or unsecured kind of loan increases risk of default of repayment.

How do I improve my credit Score? 

Know your current standing – The first step towards building positive score is to know where you stand. Having an idea about your current outstanding loans and working towards a repayment schedule. 

Never delay payments –Any kind of delay in bill payments, be it credit card or loan EMIs could reduce your score, which makes timely payments a key role in maintaining a decent score.

Don’t utilise your entire credit – Never go overboard when it comes to utilising credit limit. Spend within the limit is bound to build your score, while exceeding it could come as an expense.

Limit your cards/loans – A quick look at your credit cards would help you understand the actual cards you need. It only leads to complication in loan repayment.

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