Wednesday, 3 February 2016

How do I remove my name from the CIBIL defaulter list?

The importance of having a good credit score cannot be stressed enough; it is one of the primary yardsticks of an individual’s financial fitness. These days, no lender is likely to extend a loan (or approve a credit card application) without first going through the applicant’s credit report at length. An unsatisfactory report or a low score thereof is a likely reason for denial of credit.
Hence, to be able to obtain credit when you require it, ensure that your score is healthy and that nothing will negatively impact your score.

What then is a CIBIL score?

A credit report (and the score) is offered by credit information companies or bureaus the world over. In India, there are currently four bureaus operational, of which CIBIL is the oldest. By virtue of the same, a credit report and/ or score are often colloquially referred to as a CIBIL score. A score ranges from between 300 and 900, and the higher you are to 900; the better is your score. Most lenders look favourably at a score of 750 and above.

When you want to check your score, you can however request for a copy from any or all of the bureaus. While the score may differ slightly across each report, the parameters used to arrive at the numbers are similar. 
Case study

Mr. Desai had approached Bank A for an auto loan, and his application was approved at a high rate of interest. At the same time, he had also approached Bank B, where his loan application was rejected outright. Both these financial institutions cited a low CIBIL score as the reason for their decisions.

Had Mr. Desai’s score been good, chances are that his loan may have been approved at a lower rate of interest, saving him a substantial sum of money in the long run.

Wanting to understand the reason for the low CIBIL score, Mr. Desai requested for a copy of his credit report. Upon going through it in detail, he realised that there was a loan account wherein he was marked as a defaulter, which was weighing heavily on his score.

Let’s now see what you can do in such an instance.

What is a CIBIL default?

This can happen for a variety of reasons, including when a loan EMI or credit card payment is past due for 90+ days. It is also likely for example, that data is mentioned incorrectly in your report, such as personal information (name, date of birth) or information pertaining to your loan accounts.
Remember that not always is it a default owing to late or non-payment, but also on account of a human error.
Statistics show a leap in the number of willful defaults, however, in the span of one year.

What are the steps to take in case of a CIBIL default?

The first thing to do would be to obtain a copy of your credit report. Upon receipt of the same, identify the reason as to why your report highlights a default. 
Next, you would need to report this error/ inaccurate information to CIBIL, together with valid proof for rectification of these details. Let us take an example: Mr. Verma had outstanding credit card dues on his account, which had been subsequently settled. However, because this information was not reported to CIBIL by the credit card issuing company, Mr. Verma’s report continued to show a default. 
In another instance, Mr. Shukla identified a loan account that he had not availed of. This was a case of identity theft and corrective measures needed to be taken immediately.

Similarly, if you need to have information rectified on your credit report, bring it to the attention of the concerned bureau with requisite proof. For example, in case of account settlement you would receive a settlement letter from the concerned lender, which needs to be provided to CIBIL.

Remember, CIBIL itself does not maintain a loan defaulter list. It maintains the credit history of individuals as reported to them by the member institutions. Hence, CIBIL does not have the authority to modify any account information without confirmation from the concerned lender, as per the Credit Information Companies (Regulation) Act, 2005. Once the change is approved by the financial institution or bank and sent on to CIBIL, CIBIL will update its records accordingly, typically within 7 working days. 
Why is healthy credit history necessary?

Being on the CIBIL defaulter list can mean taking a hit on your financial fitness. It is prudent to keep track of your score at regular intervals and ensure your name is not on a loan defaulter list.

If your CIBIL score needs attention, consider contacting a credit health management company such as Credit Sudhaar to work on how to improve your CIBIL score – your key to a secure financial future.

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