All you should know about CIBIL scores.
History: The Credit Information Bureau India Limited is a Credit Information Company, founded in the year 2000. The Company was formed to address the issue of credit information sharing in India and create a market for default free credit. Banks and Financial Institution prior to this had lost a lot in defaulted loans, since there was no authentic mechanism to detect the credit default was in place. I remember prior to this most banks would carry out their internal checks and a Satyam Check before credit offering. A lot of smart borrowers had duped banks of several careers, a defaulter of Bank A would easily get a Loan from Bank B since no credit information sharing was practiced that time. The RBI finally in consultation with the Banks decided to form a Credit Bureau, which would update all the information about Loan Borrowers and their repayment behavior. This is how this Credit Bureau was formed.
What is CIBIL Report:
The CIBIL report has all the personal information of the customer, i.e. Name, Address (Residence & Office both) Contact Details, PAN NO details, etc. His credit history will also be registered of previous loans, current loans , Credit Card details.Status of credit, Satisfactory repayment or overdue on any of these relationships. Based on the performances on these relationships a Credit Score is determined, which normally falls between 300 to 900, if your credit score is less than 750 you might face a problem getting a Loan or Credit Card. This information helps banks to decide on Customers Loan Eligibility. The bank will only lend it to people who care credit worthy.
How is CIBIL Score Calculated: According to Ms Harshala Chandorkar (Vice President, Consumer Services & Communication CIBIL.) The most important element of score composition is depended on Loan repayment behavior of the Customer. CIBIL Transunion Score is calculated based on information in the " Accounts" and " Enquiry" section of your report. The score is calculated based on the following factors:
Credit utilization: How much credit the customer is using?
Defaulting/Deliquency : How many accounts are past due by how many days?
Trade Attributes: How old are this consumer line of credit? What type of credit does he have? Does the customer has a good mix of credit or is it all credit cards?
Here is the break up of all factors that impacts CIBIL Transunion Score:
Past Performance: Individual past performance of their debt obligation is most important criterion which contributes approximately 30 % weight-age to the CIBIL score.
Type of Loan availed Secured or Unsecured and duration of the credit history established contributes an additional 25% to the CIBIL score.
Credit Exposure: The total amount of credit exposure contributes another 25% to the CIBIL score.
Other Factors: Other factors such as credit utilization recent credit behavior, contribute to the remaining 20% to the score.
The CIBIL Transunion score not only determines whether or not you qualify for the loan but it also has an impact on remaining terms and condition on which you can get a loan.
To know your CIBIL Score, you can apply for a CIBIL Transunion credit report by paying 500/- Rs and keep yourself updated on your credit ratings.
For any query regarding CIBIL score kindly mail us at dbisht@yahoo.com for further details.
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