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.
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