The Credit Information Bureau (India) Limited (CIBIL) is India’s leading credit information company and maintains information pertaining to consumers’ credit history. Suppose you wish to borrow a car loan and approach a bank closest to your residence for this purpose. The bank will first have to assess your credit worthiness before granting you the loan. It goes without saying that the bank will examine your income proofs and other documents. But how does the bank know if you are servicing your liabilities with other banks promptly? How does it determine if you have borrowed according to your repayment capacity? In short, how does the bank know about your credit behaviour in the past?

This is where banks and other financial institutions make use of CIBIL. When you approach a financial institution for a credit requirement (be it a loan or a credit card), that institution analyses your credit history by accessing your CIBIL score and CIBIL Credit Information Report (CIR). These two form an integral part of your credit worthiness. Banks also submit your information to CIBIL when you apply for a new loan or on a monthly basis when you service the loan you have taken. This information is updated in your CIR.

Let’s look at various elements of the CIBIL Credit Information Report. Your credit report is divided into six sections:

1. CIBIL TransUnion Score: This shows the current credit score. The credit score can range between 300 and 900. This is determined based on the credit and enquiry information which is present in the credit report. Lenders generally view a score more than 700 as favourable. Higher the credit score, the better are your chances in availing the loan. You can improve your score by displaying prudent credit behaviour at all times. Avoiding late payments and defaults, reducing unsecured loans in your balance sheet, reducing how much you use your credit card limits and being careful in the number of loan applications you make are some ways of protecting and improving your credit score.

2. Personal Information: This section contains your personal information such as your name, gender, date of birth and identification details such as PAN card, voter’s id, driving license or passport details. The information is sourced from lenders where you have loans or to which you have made applications.

3. Contact Information: This part contains your present and past addresses, telephone numbers, mobile numbers and email address. The most recent information is shown at the top.

4. Employment Information: This shows occupation details, including income details and if you are a salaried individual. This information is taken from your loan application and may not be up-to-date.

5. Account Information: This is the most important part of your credit report and is directly responsible for the credit score. This section has details of your loans and credit cards, along with the monthly repayments you make, upto a period of 36 months. The financial institution, type of credit facility availed, the loan ownership type and details of the loan are shown. The amount of loan sanctioned, the current balance outstanding, the amount overdue, the number of days this is overdue and the loan status are some details which this section displays. The information is sourced from the various financial institutions in the country. Banks usually view this section with great detail, as this shows if the loan applicant is a credit worthy borrower or if he is a defaulter and if so, the instances of default.

6. Enquiry Information: This shows the list of lenders who have viewed your credit report, when you had approached them for a loan. It has details of the name of the lender, the date on which the enquiry was made by the lender, the type of loan for which the enquiry was made and the amount of such a loan.  As and when you make new enquiries, this information is added to your credit report.

You can click here to view the video which explains the various parts of your credit report. It is seen that the CIBIL CIR is very detailed and has a huge impact on your borrowing conditions. A high credit score and a clean credit history can help you get easier access to credit and at better terms. You can access your CIR and CIBIL Score by submitting an online application form on the CIBIL website and by paying Rs. 470. Alternately, this can also be done in the offline mode. Access your credit report to understand how good or bad your credit history is in the eyes of lenders, and take active steps to improve your score.

The author can be reached at smitha@gettingyourich.com

No one wants a poor credit score. Credit Information Bureau India Limited or CIBIL maintains the credit history of all borrowers in the country and provides the Credit Information Report or CIR to all banks and financial institutions. If your credit score reflected in the Credit Information Report is low, then you will obviously face a problem in obtaining new loans or credit cards, and will hamper your credit standing. There are credit counselling agencies which will develop customized plans for you and help in correcting your credit history. But what can you as an individual do to improve your situation? Here are some Do-It-Yourself techniques which can help in improving a poor credit score.

Check your credit report: Many a time, people don’t realise that a poor credit score can be because of a mistake in your credit report. You may have paid off a loan or closed a credit card and think that all is well. However, if the bank fails to update its records and/or fails to inform CIBIL, then this will result in a poor credit score. So check your credit report for any mistakes first. If you find some mistake, then you can make use of the dispute resolution facility with CIBIL. Please click here to fill the online dispute form and sort out the problem. 

If the problem of a poor credit score is not due to a mistake in your credit report, but because of your past credit behaviour, then you can take the following remedial measures to improve the situation:

Cut down your expenses, atleast till the situation normalises: When expenses are high and unnecessary, it spells trouble for any person. More so if you want to improve your credit score. Spend less and save more - this can leave you with more cash to pay off dues. You must also try and avoid new credit card purchases and use cash instead. Spending less on your credit card also means that you are not very high on your utilisation limit, meaning your credit score is not affected negatively. You simply need to watch your expenses and inculcate discipline is setting aside some amount for repayments. When you are on the path to improve your credit score, this is the first task you must focus on.

Start paying off the outstanding debt: Reducing your existing liabilities can push up your score. When you promptly service your loans, it shows that you are disciplined and serious about improving your credit standing. Similarly, if you have a high credit limit on your card and use a major portion of this, then it reflects badly on your score. So begin to off your debt, preferably starting with large, unsecured loans.

Pay your dues on time: One of the main reasons why a credit score deteriorates is if you do not pay your dues on time - be it your EMIs or your credit card bills. A missed instalment or payment can damage your score and have severe repercussions, especially if it goes beyond 90 days due. So remember to start paying your dues on time. Keeping reminders or automating payments from your savings account can solve this problem to a large extent.

Avoid applying for a new card: Having multiple credit cards can be fashionable; but it only increases stress and also increases chances of a credit default. You may miss out on payment due dates if you have many cards. When you are trying to repair your credit score, you must not apply for a new card as new credit enquires can further harm your credit score. Also use older cards first, as your old card has a longer credit history. When there is a history of good payment track record, it can improve your score.

It is very easy to get a poor credit score, but quite difficult to improve it. You must remember that there is no overnight solution and it will take a considerable period of time to normalise the situation. Perseverance, credit discipline and conscious financial planning can help you improve your credit score over time. 

Smitha Hari

The third eye is said to be the eye of insight - an eye that provides a vision beyond the ordinary. So is Credit Counselling a Third Eye to your Financial Planning? Well we will find out!

The concept of Financial Planning is surely better known than Credit Counselling. But let me begin with decoding each concept…step by step!

Financial Planning, at its simplest can be defined as a process wherein a Financial Planner would examine your current financial situation, understand future financial goals and then develop a customized plan for you. This is the process. Next, let me list down the broad steps taken by a Financial Planner:

• Understand and examine current financial situation
  
• Establish goals – Buying a new house, retirement planning etc.
  
• Develop a step by step detailed financial plan customized as per your needs
  
• Implement the financial plan to help you protect your assets and grow your money
  
• Review and revise the plan as required
  

On the other hand, Credit Counselling can be defined as a process wherein a Credit Counsellor would understand your current loans and credit cards, understand your current budgets & servicing capacity, examine your credit report, score and history and then develop a customized plan for you. I have listed down the broad steps that are taken by a Credit Counsellor:

• Understand and analyze your current liabilities – loans, credit cards, EMI
  
• Guide you on how to read and understand your credit reports and scores
  
• Develop solutions and strategies to improve credit scores
  
• Handhold you throughout the credit life cycle process
  

Going back to my question – Is credit counselling really the third eye to your financial planning? The answer could be yes! But let us logically buy into this opinion.

Let me explain this to you with the help of a story. Let us assume Mr. Aam Aadmi – an investment banker! He has set certain goals which he wants to achieve at different stages of his life.

Typically, Aam Aadmi would approach a Financial Planner who would examine his current assets and investments and draw out a detailed step by step plan that would facilitate him in achieving his goals.

But a fact that cannot be ignored is that Aam Aadmi might have to take a loan for his car, house or child’s education! Now what if Aam Aadmi’s loan is rejected due to a poor credit report and score? All because his liabilities were not examined and neither was his credit behaviour. Aam Aadmi was taught to save for the rainy day but not about the importance of repaying loans on time and maintaining a healthy credit life!

Credit Counselling could have helped Aam Aadmi accomplish his goals! Let me list down few benefits from Credit Counselling:

If you identify with Aam Aadmi then maybe Credit Counselling is the answer for you and the third eye to your financial planning!