Saturday, 5 March 2016


For new learners, a credit report is a report that provides financial horoscope of the borrower’s information i.e. name, address, PAN, passport, election card details and relevant details which were submitted earlier to get the credit facility.

A credit report with good credit score of 750 or above is a must to get a loan from financial institutions. When borrower applies for a loan,  the lenders get his credit report from  CIBIL, if his credit score is below than expectation, lenders will refuse application.

Credit score is a mathematical arrangement between 300 and 900 of borrower. It is a part of credit report. For most banks, 750 is a threshold, while CIBIL claims that 79% of all new loans sanctioned are to individuals with CIBIL score (credit score) above 750. Higher the score is positive chances to get the credit.

Identity theft means posing as someone to obtain credit in that person's name. Fraudsters manage to access documents like pan cards, election cards, residence proof by false promising to avail the loan and then establishing identity and address of individuals. Loans and Credit Cards are issued in the name of innocent individuals and fraudsters use that money and never pay back.

Credit reports of such innocent individuals show a “default” or “written” status against such loans. Worse, these individuals have no clue on what's happening, and face a rude shock when they apply for a loan.

The only solution is perhaps to keep accessing one's credit report at regular intervals. Credit reports capture loan enquiries made in an individual's name as well as new loans disbursed. Most credit observers recommend accessing credit report at least once a year.


Loan,credit card rejected ? low credit score ?
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Monday, 2 March 2015

Impact of Credit Scores on Your Life in future

Now it is clear that CIBIL Transunion Credit Score affects your ability to get loans and credit accounts. Most of us don't know that this Score is also going to be used in other areas of your life very soon in near future.

Mobile Companies

Smart Phones can be very expensive, and as a way of reducing the cost many mobile operators will provide discounts if you sign up for Postpaid connection. As part of this process, many mobile companies will first check your CIBIL Credit Score to determine whether or not you're likely to make all the payments on your postpaid account Agreement contract.

Utility Companies

Many people have learned the hard way that an unpaid Electricity Bill or Telephone Bill can show up on their credit report, but not many people know that it will become very soon a common practice for companies to check your credit score before turning on your Electricity or landline facility. If your credit score is too low, they may demand security deposit or advance fees, or a guarantor to ensure your bills are paid responsibly.
Property on Rent or Lease

It will be a common practice in future for landlords, licensors or owners of the premises to ask for your Credit Report and Score before handover the Commercial, Residential or Industrial properties on rent or lease. They will ensure that you have a strong payment history, and are a financially responsible person. If your credit score is too low, they might not rent you their properties

Credit Sudhaar, a non-specified user entity, is accessing confidential credit records from CIBIL while claiming to help individuals improve and maintain their credit health. Why is the financial regulator, RBI, silent?

Credit Sudhaar, a firm set up by former bankers Gaurav Wadhwani and Arun Ramamurthy, says it has a tie-up with CIBIL for offering credit advisory services and will help individuals in improving their credit health which will in turn enable customers to get better offers from lenders at the CIBIL Market Place. What it does not say is it is neither registered with the Reserve Bank of India (RBI) as a non-banking finance company (NBFC) nor it is a specified user entity of CIBIL but will access credit records of crores of individuals.

While there is no word from CIBIL on this strange partnership, what is surprising is how the credit bureau may have allowed a non-specified user entity to access its database. In a press release, Credit Sudhaar said it is associated with Dipran Finance Pvt Ltd. However, on its website it mentions affiliation with Safe Capital, an NBFC. In an email reply, the firm said, “Credit Sudhaar is associated with both Safe Capital and Dipran. Both Safe Capital and Dipran are members of CIBIL”.

Even on its website under the FAQ section, replying to a question “Are you approved by the RBI?” it says “Yes. We are affiliated with Safe Capital which is an approved institution as per RBI charter”.

Earlier, Credit Sudhaar used to mention itself as an NBFC registered with the RBI, which was changed later.

This also means, Credit Sudhaar may be using either Safe Capital or Dipran’s login credentials to access the CIBIL database, especially the portfolio review which gives complete details of an individual. Since Credit Sudhaar is not a specified member entity of CIBIL, this violates Section 22 of the Credit Information Companies (Regulation) Act, 2005 (CIRCA), which says..

22. Unauthorised access to credit information.—

(1) No person shall have access to credit information in the possession or control of a credit information company or a credit institution or a specified user unless the access is authorised by this Act or any other law for the time being in force or directed to do so by any court or tribunal and any such access to credit information without such authorisation or direction shall be considered as an unauthorised access to credit information.

In addition, the CIRCA clearly defines a specified user who can register with a credit bureau as member entity. Section 2 (l) states “specified user” means any credit institution, credit information company being a member under sub-section (3) of Section 15, and includes such other person or institution as may be specified by regulations made, from time to time, by the RBI for the purpose of obtaining credit information from a credit information company.

Besides credit institutions, insurance companies, telephone services providers, credit rating agencies registered with Securities and Exchange Board of India (SEBI), a stock broker or sub-broker registered with SEBI, a trading member of recognised commodity exchange, SEBI and Insurance Regulatory and Development Authority (IRDA) are regarded as specified users under Regulation 3 of the CIRCA.

Let’s put it in simple words. Credit Sudhaar is just a specific services provider. CIBIL is allowing credit institutions and others to sell their loan products or other services on its Market Place. Credit Sudhaar is only registered on Market Place to offer “credit advisory” service for which the charges are Rs10,000 (it is mentioned as processing fees).

Both Mr Wadhwani and Mr Ramamurthy, the promoters of Credit Sudhaar had worked with Standard Chartered Bank and Citi. Both were also directors of SHAHA Finlease Pvt Ltd, an NBFC formed to buy bad assets from StanChart. On several occasions, the RBI, StanChart and the banking ombudsman had reprimanded SHAHA Finlease for its unprofessional conduct and unruly collection agents. Even on the Internet, there are number of complaints against SHAHA Finlease.

Our mails to CIBIL and the RBI remained unanswered till writing the story. We would incorporate their replies as and when we receive it.

Monday, 21 July 2014

Tips to avoid rejection of your home loan application

Real estate is the most coveted investment instrument in the country. Buying a home, whether for investment or residential purposes, can take years to materialise and given the prices, few can afford to pay the money upfront. In such situations, buyers inevitably turn to banks for home loans.

Although the norms for approving home loans have eased in the recent past, don't expect it to be a cake-walk. One small mistake can result in you merely dreaming of the house, and never actually owning it.

We look at factors that can play a crucial role in getting your loan approved or rejected.


You cannot build a house if the foundations are flimsy, right? When it comes to loan approvals, banks use a similar analogy. If you have a low credit score, you will be denied a home loan outrightly even if you fulfill all other conditions. Credit score is considered to be the most important factor by the banks while disbursing a loan.

"Credit score reflects a consumer's behavior towards the financial transactions. In some ways, it is a mirror to his financial habits and underwriters base their decision and develop risk-based pricing based on the credit score," says Anil Sachidanand, MD & CEO, Aspire Home Finance Corporation.

So, if a person has defaulted or delayed the payment on any kind of loan or credit cards, it will have a negative impact on the credit score. Other factors like being guarantor to a person who defaults on payment of his loan can affect your credit report too if you fail to repay his loan. So, be very sure before taking up the role of a guarantor. There are credit rating agencies like CIBIL, Experian Credit Information Corporation of India, Equifax Credit Information Services and High Mark Credit Information Services that provide credit score to individuals. "Once you submit your loan application, the lender seeks a copy of your credit report from the bureau. They analyse this not only for the credit score, but also to review the extent of existing loans / credit cards, performance of ongoing and closed loans. All these go in to the final assessment of your loan application," says Rahul Soota, executive director, Mymoneymantra.

A credit score provided by CIBIL is a three-digit TransUnion score which is derived from the credit history found in credit information report (CIR). A CIR is an individual's credit payment history across loan types and credit institutions over a period of time. It ranges between 300 and 900. It indicates the probability of default of a borrower based on their credit history.

To maintain a healthy credit score, one should ensure timely dues payment and avoid taking too many unsecured loans as it may be considered negative. But if the damage is already done, you can work towards improving it slowly. (See:How to repair a bad credit score).


Your credit information report contains your personnel detail, so wrong information can lead to a mismatch between the details on your loan application and credit report and hence lead to your loan rejection. If there is any change in the personal details, you must update your lender so that it is reported to the credit information bureau and is reflected in your credit report. Any individual can get the credit report for a nominal fee from the credit bureaus.

However, it is important to check the report for anomalies like a credit card listed in your report but not owned by you, or a loan on their name which they had never taken. "Prospective borrowers can also apply directly to the credit bureau for their credit report for a nominal fee. This allows you to review the facilities listed against your name, seek corrections if you spot any anomalies like a credit card listed in your report which is not yours and to know your bureau score", says Soota. All bureaus have dispute resolution forms on their websites which aggrieved customers can fill and send with relevant identification documents.


Some people tend to apply to multiple banks at the same time. However, remember that if your loan is rejected from one bank then it can have an impact on your credit score and hence lead to the loan being rejected by other banks too. It is better to wait for the reply from one bank before applying to another so that you know why your loan is rejected and get the same rectified.


Since the repayment of loan is of utmost priority to the lender, they would like to ensure that you have timely repayment capabilities when he disburses the loan. In case of salaried person a steady flow of income is determined by the stability of job. "Since repayment of home loans is normally sanctioned for 15-20 years, stability of income in future becomes a necessary criterion to be assessed at the time of loan sanction. For example, if the borrower has a contract of employment with just eight months left in it, it is natural for the lender to enquire if the contract has been renewed in the past or whether the borrower holds any professional qualifications which would give comfort that alternate employment would be forthcoming," says Soota.

It is a similar story when it comes to changing jobs. While it may give the buyer a higher income level, it gives a negative impression to the lender. It is generally advised not to change your job if you are planning to take a home loan in the near future. In fact, the financial strength of the employing company is also considered as one of the factors for the evaluation of the application says Sukanya Kumar, founder and director, Retail Lending, a home loan consultancy. "People working in a proprietorship company, having less than 50 employees & not having provident fund facility, face issues in getting a home loan," adds Kumar.


Age is one of the most important factors considered by the lender while disbursing a loan. Typically, they put a minimum age bracket of 23-24 years and maximum limit of 60-65 years for loan applicants. "Assuming a 22-year-old, who has been working for the last three years, applies for a home loan and the qualifying criterion for that lender is a minimum age of 23 years with at least two years of continuous work experience, the lender would in all probability turn down such an application," says Soota.


If you want to get a home loan of a higher amount, clubbing the income of your spouse is a good option. But while banks allow clubbing of income of the spouse, father and son, the same does not extend to every family member. Some banks are sceptical of clubbing the income of the siblings because in case of a dispute, the EMI could be delayed. Clubbing the income with any other relative is not allowed. Also, a coapplicant can't be a minor.


Banks also make their decision to disburse loans on the basis of the project's location. Take for instance, Noida Extension, where a number of projects suffered due to lack of clearance and acquisition disputes in 2011. As a result, a number of public sector banks stopped sanctioning fresh loan sanctions in the area, as per news reports. "All lenders have limitations with the geographic locations. If the property is beyond such limit, the loan will get declined. The technical valuation of properties in remote locations may also be lesser than the purchase cost; banks do try to cover the risk of funding in an under-developed area on case-tocase basis," adds Kumar.


You must ensure that you are buying a house at a price which is close to the market price. This is important because the bank does the valuation of the property itself and will give a loan of upto 80% of the property value after considering other factors like your repayment abilities.


"In the event that the property does not have a clear and marketable title, or there are issues connected to the approvals from the relevant authorities, normally banks or home finance companies keep the loan sanction letter valid till the customer finds another property which has clear title and approval," says Sachidanand. So, before buying a property you must ensure that it is not involved in any dispute.


Banks ascertain your repayment capabilities before disbursing the loan. It depends on the disposable income that is left in your hand after paying off existing EMIs. Banks generally give a loan which amounts to an EMI of upto 50% of the disposable monthly income. So, first assess your repayment capabilities before applying for a loan.


Thursday, 28 March 2013

How to Remove your Name from CIBIL Defaulter List?

The first step is get your credit report from credit rating agency - Online Request Form

The next step is to read it carefully and know the reason why your name is in the default list?

1- It could be due to Human Error e.g. Wrong - Name, DOB, Gender, PAN, Passport Number, Address etc.

2- It could be due to Incorrect Reporting/Mistake e.g. Wrong Credit Cards Details, Ownership - Accounts that aren't yours, but in your credit file, Late Payments - Reports of late payments in your credit file, when you paid on time or you may be a victim of identity theft.

3- It could be due to Loan Default e.g. Loan Defaults, Credit Cards Default, Late Payments and any other factors that are negatively impacting your CIBIL score and history.

For first reason, you would just need to report it to CIBIL with valid proof and they will fix it.

The second reason is also easy to fix. In these cases check out - who put you on default list e.g. Bank Name. If you have any acknowledge letter or any proof (related to above problem) from the bank or financial institution just submit that to CIBIL. If you don't have, you have to follow up with that bank and got a letter and forward it to CIBIL. CIBIL then verify the proof with the bank and incorporate the update on your credit file. With in few days the correct info will be displayed in your credit report.

If bank is not cooperating with you then write a letter to bank to fix it with a copy to CIBIL. If you don't hear from them in 30 days or not satisfied with the action you can lodge a complaint with Banking Ombudsman to resolve the issue.

The third reason could be that you have indeed defaulted on a loan and hence your name was entered in the defaulter list. If this is the case, You need to take up this with the defaulted bank and settle it out. And submit that settlement letter to CIBIL. The default will remain on your file but show as settled.

If you don't want to settle it than it will remain on your file for seven years and it will destroy your score. During this period no one will give you any loan or credit. After this seven year period, you again need to start rebuilding your credit by paying your loan and credit card bills on time.

Thursday, 23 February 2012

Take advantage of India’s first consumer credit bureau score and database.

The CIBIL TransUnion Score can help lenders make more reliable, confident decisions based on robust data and objective analytics.

The CIBIL TransUnion Score can also help you reduce the inefficiencies associated with manual subjectivity, errors and limited information. The CIBIL TransUnion Score is the result of collaboration between Credit
Information Bureau (India) Limited (CIBIL) and TransUnion, a trusted global leader in analytic and decision services.

Sunday, 4 December 2011

Good and Bad credit Report

CIBIL report is not always bad. It’s an extremely good concept which is now taking shape in India recently. If there are two people A and B and A is a good guy and B is a bad guy, obviously A should get better rates of interest, faster processing, first right to loan. Whereas, guy B should get loan at higher rate of interest (because he is risky) and may be banks can even deny entertaining him at all.
CIBIL gives us the power to build our credit report. So if you become responsible and use your credit effectively and with planning, you can build a good credit history with CIBIL, which will help you in long run. Also note that taking a lot of loans without having the capacity is also a negative thing and that can affect your credit report.

Thursday, 1 December 2011

Credit Information Bureaus and 'CIBIL'

All information regarding your track record on servicing your loans or cards or other debt products are updated by the financial institutions to the credit bureaus at regular intervals. The standard interval of update is on a month on month basis.

During such large amount of information flow from the financial institutions to the credit bureaus there is a good possibility of the financial institution wrongly or in accurately updating information.

For example you might missed a couple of payments and your account has become overdue and the financial institution would have updated the same with the credit bureaus but when you regularize the account the financial institution may not have updated this information and still show your account as overdue.

In some other cases you might have pre-closed a particular account but the financial institution has still not updated the same with the credit bureaus.

In a vast number of cases and in our experience where the customer has settled a bad loan, we often find that the settlement would not been updated with the bureau.