25th March 2016

Learning Center

Volume 1

What is CIBIL Company?

A CIC is a company that collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to the CIC by banks and other lenders. on a monthly basis. This information is then used to create Credit information Reports which are provided to lenders in order to help evaluate and approve loan applications.CICs are also commonly referred to as “Credit Bureaus”.The use of CIBs is best illustrated with an example. I have a home loan with Bank A and a credit card with Bank B. Both the Banks A and B have submitted my personal information and payment details to the credit bureau [in this case it was CIBELI, Recently, I applied for an auto loan to Bank C, Upon receiving my application, Bank C requested CIBII. for my CIR so that it could assess howl have been paving my current dues and whether I will be able to manage the additional burden of another EMI. While the bank also requested my Form `I6, savings account statements and other identification documents, the CIR has become an often used tool in evaluating loan applications.

What information does a CIBIL CIR contain?

A CIR is a month on month record of an individual’s loan related EMI or credit card payments, Loans can include home loans, credit cards. Personal loans, automobile loans and overdraft facilities Other information included in a CIR is as follows:

  • Personal information related to the individual such as name, date of birth, address and identification numbers like PAN number, Passport number, Voters number and Telephone number
  • Account information such as the type of loan taken home, auto, personal, overdraft, etc], the size of the Loan, the Current balance outstanding, overdue amount if any, number of days a payment is overdue either is an over amount and so on
  • Information on the number of `Enquiries’ made by the banks on the individual. An “Enquiry” is created on your CIR every time the lender requests the credit bureau for your CIR.

Does CIBIL or any other CIC maintain a defaulters list?

No. This is a very common misconception. CICs collect all credit information. This includes information pertaining to individuals who are matting their payments on time as well as those who are in default.

Volume 2

What does the advent of Credit Information Reports in India mean for me as an individual?

The biggest change that the advent of CIBIL CIRs in India brings is making your payment history available to a Lender, when you apply for a new credit facility. So, how does this bring about a big change? Well, previously lenders would treat all loan seekers equally. Each applicant, if approved by the lender`s internal credit policy, would get charged the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all borrowers, in order to compensate for the possible default of a small portion of the loans disbursed. In other words, it is a college professor [the lender] punishing an entire class of students [borrowers] for the mischief played by a law [defaulters].

Today CIR provide lenders the ability to differentiate between those who have honored their obligations Responsibly and those who have defaulted, Individuals who have appropriately managed their obligations Build ‘reputational collateral’ with lenders. In turn, this reputational collateral allows individuals to negotiate better terms with a lender. Hence, prior to commencing your loan hunt, it is advisable to purchase and review your CIR. It helps you Understand what the lender will review while evaluating your application. Secondly, to identify and rectify any discrepancies that you may find on your CIR and hence. Prevent any wrinkles during the loan evaluation process.

How can I obtain my own CIBIL CIR?

All credit bureaus provide individual’s access to their CIRs for a nominal fee. What they require is an identity Proof copy PAN Card, Passport, Voter’s IUI, address proof copy Bank Statement, Electricity Bill, Telephone Bill and payment Demand Draft or Online payment the application can be mailed, or couriered to addresses present on their corporate websites. Click here for CIBIL report https://www.cibil.com/online/credit-score-check.do

If I find discrepancies on my CIBIL CIR, is it possible to correct them?

Definitely the bureau which has issued the CIR can help you resolve the discrepancies found. This is known As a “Dispute Request” in credit bureau parlance the disputes can be resolved by simply calling the bureau, Or emailing on the address specified on the bureaus website. A few details like the Control Number of the CIR, Name, Address, Date of Birth and the Nature of the Discrepancy are required. The dispute is then routed to the relevant lender for confirmation. However, as per law, the bureau is not Permitted to make changes to your CIBIL CIR, if the relevant lender disagrees with your dispute

Volume 3

Understanding your Credit Information Report

We are all familiar with the fear and anxiety that we feel when applying for a loan. After all, it’s the Lender Who decides whether we can own our dream home, our first car or whether our children can pursue higher Education In a nutshell, a better life depends on the Lenders decisions. We are unsure of the lender’s criteria to evaluate our application. Is it the size of our income The number of assets fixed deposits and investments, or is it our past performance regarding payments with lenders We have a credit facility with? White other factors do play a part in the Lenders decision, the CIR plays a Pivotal role currently, almost all lenders access CIR prior to approving loan applications. Naturally, it’s Critical that you get a copy of your CIR and understand it well before applying for a loan

So what exactly does your CIR contain?

Consumer Information:

This section provides the lender with your name, date of birth, gender. An identification number [such as PAN, Voter ID or Passport Number] and contact details {telephone numbers and addresses]. Up to It Addresses are provided on the CIR. These details indicate who the information – on that CIR – pertains to.

Summary:

This provides the lender with an overview of the CIR. it includes the total number of accounts and enquiries [Up to the last 24 months] on your CIR,

Accounts:

This is the most important section of your CIR. This section contains the details of your credit facilities. The Account section contains the name of the lenders, the type of credit facilities [home loan, auto loan, credit Card, etc], the account numbers, whether single or jointly held, when each account was opened, date of the Last payment, loan amount, current balance and most importantly, a month on month record of up to 3 years Of your payments

Enquiries:

This section provides you with details regarding loan applications you have made such as, the name of the Lender, date of the application, and the type and size of loan the enquiries are captured for a period of 7 Years simply put, this section indicates how ‘credit hungry you are.

Volume 4

What factors on my CIBIL CIR are the most critical to my loan approval?

CIRs have been widely used by lenders to evaluate loan applications for over 5 years. However only recently Have people begun to realize how crucial it is to be aware of and maintain their credit history. Understanding the CIR helps you identity the right time in your financial life cycle to apply for a loan and increase your chances Of a loan approval Listed below are the most important attributes looked at by a lender while evaluating Your application

Attribute 1: Payment

This appears in the Accounts section of your CIBIL CIR. There are 2 pieces of information: the Days Past Due DPD and the month and year of payment that reside here, the DPD indicates how many days the payment Is late that month anything other than “000” is considered negative by a lender. Up to 36 months of this Payment history [with the most recent month displayed first] is provided in this section.

Attribute 2: Current Balances

Also appearing in the Accounts Section of your CIR, the current balances on various loans indicate the Depth of your debt, sum of your current balances helps a lender determine your strength to take on Additional EMIs, in relation to your current income, Naturally, Lower the current balance, the better the Chance of your loan getting approved

Attribute 3: New Credit Facilities

If a lender observes that you have recently been sanctioned a number of new credit facilities, it would mean That your monthly outflow in terms of EMIs .are likely to have increased, hence it may have a negative Impact on your loan application

Attribute 4: A number of new Enquiries

If you have applied for a number of loans in the recent past, the chances of your loan getting approved are Likely to suffer, simply because this credit behavior indicates that you are “Credit Hungry” and implies that You are in an urgent need of money. It is likely to make lenders more cautious while evaluating your application. If you are planning to apply for any sort of credit facility for a purchase home or car in the near future, it’s imperative to check your CIR 3-4 times each year and ensure that your `Reputational Collateral’ is reflected accurately. This will provide you with access to credit faster and at better terms. And rest assured that Enquiries are not added to your CIR when you purchase one directly from a credit bureau.

Volume 5

How do you improve your Credit Report?

Your credit history, other than your income, is the single most important tool that a lender uses to evaluate Your application for any loan or credit card, naturally, it’s important that you understand your Credit information Report il3|R] and what it takes to maintain a good credit history, so that it is viewed favorably by lenders. A good credit history can be maintained by following these ‘if simple rules;

Rule 1: Always pay your bills on time. Late payments are viewed negatively by lenders and may affect the Chances of your loan getting approved

Rule 2: Keep your balances low while the balances on your loans will only reduce over time as payments Are made, you must be diligent about matting timely payments on your credit cards. Also, you should control Your utilization, For example, if you have used Rs. 90000 out of a credit limit of Rs.100000, this may be viewed negatively by a lender, It`s always prudent to not use too much credit.

Rule 3: Maintain a healthy mix of credit. Your credit history should contain a mix of a home loan, auto loan And a couple of credit card, a high number of just credit cards may affect the chances of a loan approval. Why is it so, you may wonder. Although a credit card offers easy access to finance, it’s also by far the most Expensive form of credit, more number of credit cards with high utilization larger the payments Resulting from its high rate of interest

Rule 4: Apply for new credit in moderation. If you have made many applications for loans, or have recently been Sanctioned new credit facilities lender is likely to view your application with caution. This `Credit Hungry’ behavior Indicates your debt burden is likely to or has increased and you are less capable of honoring any additional debt.

Rule 5: Think twice before closing credit card accounts. While using credit cards may negatively impact Your credit history unused credit cards actually imply that you are financially secure. This makes lenders View your application more favorably.

Rule 6: Monitor your co—signed and joint accounts monthly. In co-signed or jointly held accounts, you are Held equally liable for missed payments. This is extremely important because your joint holder’s negligence Could affect your ability to access credit when you need it

Rule 7: Review your credit history frequently throughout the year. Unpleasant surprises in the form of Rejected loan applications can be avoided by ensuring that your CIR accurately reflects your current financial status. So reviewing your credit history 3-fi times each year is imperative. Though these general rules are important to keep in mind, each lender has his own policies to sanction a loan to an applicant.

Though These General rules are important keep in mind each lender has his own policies to sanction a loan to an applicant

Volume 6

What do you do when you spot a mistake on your credit information report?

Typically, you check your CIR when your loan gets rejected and the lender tells you it’s because of some Information on your CIR, But there is no need to panic? Mistakes on a CIR can be easily corrected with the Help of the credit bureau. All you need to do is

  • Purchase your own CIBIL CIR from the credit bureau
  • Identify the erroneous information
  • Provide name, address, date of birth, an Enquiry Control Number IECNI and the nature of the error on The credit bureaus website, This is known as a `Dispute
  • Request in credit bureau parlance.

The ECN is a unique 9-digit number found on the top right hand side of your CIBIL CIR. It is generated with every CIR It is very important to provide this number to the bureau, as it helps identity the CIR on which you would one to Dispute information

What does the credit bureau do once I raise a “Dispute Request”?

Once you have raised a “Dispute Request” the credit bureau checks whether all the requisite details have Been provided the request is then routed to the Dispute Resolution Department for analysis. This is Because one type of dispute request can be resolved by the credit bureau itself if the credit bureau is unable To resolve the request, it is routed to the relevant lender. Once the lender confirms that there is an error it Will provide the credit bureau with corrected data the credit bureau then updates the data and informs you As appropriate always remember, it’s the duty of the bureau to help you resolve your request. Watch Volume 7 for more information about the different types of errors and who [the lender or the credit Bureau] is able to correct them

Why does not credit bureau verify the information with consumers before updating the report?

Credit bureaus have the information of millions of individuals, it is virtually impossible to verify the information of each individual, the “dispute process “is provided to the consumers to help correct any discrepancies that may arise their CIR exactly for this reason hence it is recommended to review your CIBIL Report prior to submitting the loan application just to be sure that there are no error on your CIR which may hamper your loan approval.

Volume 7

What kind of errors can occur in the Credit Information Report?

Your Credit Information Report CIBIL Report is an important factor in the loan application process. Once, mistakes on your CIR can result in reduced chances of a loan approval. It is very important for every credit active individual to understand the various types of common mistakes that can occur and what it means on their CIR.

When you have purchased your CIBIL Report , you may notice that Current Balance or Amount Overdue may not be updated for your most recent payment. This will usually be the case it you have purchased your CIBIL Report within 5 days of making a payment. Lenders report information to the credit bureau on a monthly basis. Which would mean that the latest payment may not reflect on your CIR until the data is submitted by that lender. However, it the “Date Reported” Which is the date the data was reported to the credit bureau associated with that account is older than 2 months. You can write to the credit bureau to help update this information.

An inaccurate Current Balance [especially on the high side] implies that you have more debt than you do While an “Amount Overdue”‘ indicates that you are unable to service your existing loan obligations. Both are viewed negatively by lenders and may affect the chances of your loan approval.

Incorrect Personal Details

Credit information is submitted to the credit bureau by various lenders. Each lender submits your credit account along with your personal information such as name, address, date of birth, PAN Card Number and so on. The bureau than uses the personal information to collate these details into a single CIBIL Report which provides your complete credit profile

Ensure that you have provided accurate and updated details to your lender at the time of your loan application. In addition, every time your personal details change or are updated, you should inform your lender so that it is possible for him to make the necessary changes to its database.

Ownership

If you believe that either some of the personal details or one or more accounts on your LHR do not belong to you, you should write to the credit bureau. The credit bureau will look into the matter and help you update the information if required.

Overall, the best solution is to check your CIBIL Report BEFORE you apply for a loan so that you know your lender is evaluating your loan application based on accurate data.

Volume 8

What does Written Off or settled as my Account Status Mean?

When an individual does not make payments on loans for more than 180 days, the lender is required to “Write oft” the amount in question. The lender then proceeds to report this on your CIBIL Report. In case the individual makes a payment which is less than the amount the lender believes it is owed, the Lender will report this as “settled” to the credit bureau. For example, if the lender tells me I owe it Rs. 100 But I pay only Rs. 80 to the lender then the lender will report my account as “settled” to the bureau.

How does this affect my loan application?

Given that a CIBIL Report helps a lender ascertain your ability to pay additional debt based on your past performance, A “written off”` or “settled” account implies that you have not been able to pay your past dues. Hence, Lenders May view accounts that are reported as “Written off” or “settled” negatively and this may affect your chances Of a loan approval

What Steps can I take to prevent this from recurring?

The best way to avoid this from recurring is, to always pay your bills on time and avoid taking on excessive Debt Just so, that you are always able to honor your loan obligations. However, there is a situation where you may face some difficulty. Over the years, some of us may have built up a collection of credit cards from various lenders. Some of us have used these, while others may have stored the credit cards in a file or a drawer at home for future use and completely forgotten about them. Having too many credit cards makes us unable to track the various terms and conditions that we have agreed to, during the application process. Some of the credit cards bear no annual fee in the first year. However, in the second year, the annual fee is charged to the credit card.

You may have forgotten about the credit card, but the fee and interest keeps accruing to your account and You only find out about it when your loan application is rejected. This happens because eventually. The lender has to write off the amount and report it to the credit bureau. You then have to take it up with the lender and credit bureau which unnecessarily holds up your loan application.

So, how do you avoid this?

If you have any sort of credit facility, you must keep track of your credit profile by Reviewing your CIR 2-3 times each year, this will ensure that you will detect and resolve any credit related problems well in advance.

Volume 9

While applying for a loan, the form filling documentation and awaiting decisions can be quite tedious. Besides, the world of finance and banking also adds to the confusion by using acronyms which are difficult For the lay man to understand, today we will decode the term Days Past Due, commonly referred to as DPD in banking parlance, DPD is critical to your loan, because if this attribute of your Credit Information Report is perceived negatively by a lender. Your loan application may get rejected.

What does DPD mean? What are the 2 ways in which DPD can be reported?

DPD or Days Past Due appears in the Account section of your CIR. Here, it resides with one other piece of information – the month and year of payment. The DPD indicates how many days a payment on that account is late that month, anything other than “000” is considered negative by a lender. Up to 36 months of this payment history with the most recent month displayed first are provided in this section, For example, if you have taken a loan whose payments started in Aug 2010 and are 3 months late on a payment due at the end of Sept 2010 your DPD may be reflected as follows;

DPD090060030000000
MM-YY12-1011-1010-1009-1008-10

Given that your credit history helps a lender ascertain your ability to pay additional debt based on your past performance, having DPD other than “000” on your CIR would imply that you have not met your financial obligations in the past. Hence, lenders may view accounts that are reported with DPD as anything other than “000” negatively and this may affect your chances of a loan approval

It is important to note that some lenders report DPD as per the Asset Classification norms defined by RBI.

Which as follows

DPD Denotes Explanation

STD Standard Payments are being made within 90 days. Any account overdue by more than 90 days is classified as Non-Performing Asset by lenders

SUB Sub-Standard An account which has remained an NPA for up to 12 months

DBT Doubtful The account has remained a Sub-Standard account for a period of 12 months

LSS Loss An account where loss has been identified and remains uncollectible

Any classification other than “STD” is viewed negatively by lenders during the loan application process. On occasion, you may see “XXX” reported for your DPD on a certain account. This means that the lender has not reported that month’s DPD to CIBIL and hence, there’s no need to worry. The best way to avoid having anything other than DPD of “000” or “STD” on your CIR is, to always pay on time and the best way to always pay on time is. To avoid more debts than you can comfortably handle with your current income

Volume 10

It is critical to understand the Account section of your Credit information Report CITR After all. Lenders focus on this section of your CIR. before making the landing decision.

What types of accounts reported on my CIR?

Only credit facilities get reported on your CIR. Like home loan auto Loan and personal loans, overdraft facilities, credit cards, loan against shares, to list a few. However, it`s important to note, that none of your assets get reported on your CIR. Assets including your savings account. fixed deposits, mutual funds and stock investments.

Closed Accounts and what they mean to my CIR?

If you find a date adjacent to the `Closed` field in your account section, this means that that loan account has been closed by the lender .In other words, it means you have paid off your loan. However, if you have not been able to pay off your dues in full, your account could still he marked `Closed`. In such cases, you may see the `Status section populated Written –Off or Settled which is viewed negatively by lenders.

If no date is populated in the ‘Closed field, it implies that your account is still open. This can be harmful to your application, if you have taken many loans over the years. Now, why is this harmful? Well, if many loan Accounts are perceived to be open the lender is likely to think that you already have large monthly outflows in terms of EMIs. This can negatively impact your loan application. Hence, if you see open accounts on your CIBIL Report that are actually closed, raise a Dispute Resolution request with the Credit Bureau. This can be done easily on the Credit Bureau’s website.

What are the different types of Ownership indicators that can appear on my CIR?

The Ownership indicator tells the lender who is responsible for payments on that credit facility. There are 4 types of indicators that can appear on your CIBIL Report:

  • Single: You are solely responsible for making payments on the account.
  • Joint: You and someone else bear joint responsibility for payments on these accounts. It is important to check your CIR periodically, because late dues on a Joint account are likely to affect your loan application, even if you are not the one paying off the loan
  • Authorized User: This is used for add-on credit cards. It implies that you have an access to credit, but are not responsible for paying dues on that particular account.
  • Guarantor: A guarantor pledges to repay a loan on behalf of a third party who has taken a loan. Hence, he provides a guarantee to the lender, that he will honor the obligation, in case the principal applicant is unable to do so.

Volume 11

What is identity theft?

Identity theft occurs when someone uses your personal information to apply for a loan or credit card. If this application is successful the individual has access to finance that you are liable for the individual who has stolen your identity will probably not pay back the misappropriated funds. Hence, the lender will update your Credit Information Report CIBIL Report to say that you have defaulted on a loan. Unfortunately, in the event that your identity is stolen you will be unaware that this has occurred. You will most likely only discover this when you apply for a loan and your loan application is rejected.

What does it mean when I see “‘Enquiries” on my CIBIL Report when I haven’t applied for a loan?

Enquiries are usually made on your credit history when you apply to a lender for a loan. The lender accesses your CIR to assess your repayment capability. When you see Enquiries that you have not made it means one of 2 things

  • The lender is making an Enquiry to review your overall financial health
  • Someone with access to your personal information may have approached a lender in order to apply for a Loan, this is worrisome because the lender could believe that the applicant is genuine even though this May not be the case and may proceed to sanction the loan.In the event that a loan is sanctioned by a lender the account will appear on your CIR within 45 days.

What Should I do when I see “Enquiries” that I haven’t made?

The first thing you should do when you see Enquiries that you have not made is to check your CIR for loan accounts That does not belong to you. If you do find discrepancies, immediately raise a ‘Dispute Request’ by visiting the `Dispute Resolution’ page on the credit bureau’s website

If you are informed by the credit bureau that the lender has rejected your Dispute Request you should report the Erroneous account to the relevant lender immediately so that the lender is alerted to the identity theft case this will prevent the situation from recurring. The easiest way to prevent Identity Theft is to regularly monitor your credit history. Purchase your CIR 3-4 times A year and ensure that your credit history accurately reflects your credit usage and activity. If you see Enquiries [loan applications] that you have not made, immediately alert the credit bureau via Dispute Resolution and the relevant Lender that you have not applied for a loan, In addition, it is imperative that you keep your personal information, identity proofs and address proofs stored in a secure environment. If you are discarding documents ensure that the documents are shredded to prevent misuse.

Volume 12

The lender is not providing mw with the exact reason with regard to the rejection of my loan application. We are advised to contact Credit Bureau. Why?

Lenders usually check your credit history by referring to your Credit information Report [CIBIL Report] before taking a decision On your loan application, while there is little issue if the lender approves your loan application, a loan rejection can be Quite troublesome given that this interferes with your plans to purchase that dream home or new car. Often, upon Rejecting your loan application, the lender tells you to contact the credit bureau. Why? The reason the lender points you to the credit bureau is so that you can obtain and thoroughly understand your CIR. which is being used to evaluate your loan application. Given that the CIBIL Report provides a snapshot of your credit profile, it will help you to:

  • Understand the size of your total loan exposure
  • Identify areas tor improvement- missed payments. Outstanding on old accounts, etc
  • Detect errors mat may require correction this can be easily done on the credit Bureau s website Ensuring that your CIR accurately reflects your credit history may increase the chances of your loan approval.

On occasion, even if your CIR is in order, a lender may choose not to lend to you because he feels that you are not able to take on the burden of additional EMIs. In this event, you may be better off applying for a loan elsewhere.

Why is the Credit bureau reporting me as “Defaulter”?

If you have missed or been late on payments on any of your loan obligations the tender will report the information to the credit bureau. As a result of this, when you are applying for a loan, a lender may view your loan application less favorably in addition it is common that the lender will ask why you missed those payments. There could be a number of reasons such as you were hospitalized due to an illness or you were on vacation, etc. If the lender is not satisfied with your response the chances of a successful loan application may decrease

Can I remove my name from the credit Bureau list?

No, you cannot remove your name from the credit bureau’s records. Credit bureaus collect and report information Pertaining to individuals who are making their payments on time as well as those who are in default It you have missed payments in past, you can improve your credit history by ensuring that you make payments on time going forward.

Volume 13

How I got lower auto loan interest rate because of my “Good” Credit History!!!

I would like to write about my own experience of trying to get an auto loan to purchase a car. Alter much research. I had decided to buy a car worth Rs.10.29 Lacs. I only had Rs. 4 Lacs available to put in as a down payment and hence needed an auto loan of Rs. 6.29 Lacs. So I applied for a loan from Bank A [name undisclosed tor privacy] that was present at the dealer’s location. Upon tilting in the requisite forms and providing the paper work that was required [PAN Card Copy, Passport Copy, Form 16 for the previous 2 years, and 6 months bank statements] Bank A quoted me 11.70% as the interest rate for a 5 year loan. The EMI worked out to Rs. 13,897

Believing this to be too high I approached my regular bank [Bank BI to got a quote. Given that my salary account was With Bank B, there was less paperwork required [only PAN Card copy and Passport copy]. Bank B then informed me that they will get back to me in 24 hours because as per their internal process they had to access my Credit Information Report before approving my loan application.

A day later, a representative of Bank B called me and said that due to my “good” credit history I have only 2 credit cards and 1 home loan and I have never made a late payment] the bank would offer me a lower rate of 11.30% for the same5 year term. This would bring my EMI down by Rs. 126.

I was quite pleased with this offer and proceeded to call Bank A to decline their offer. The bank’s representative inquired why I was declining the loan. I responded that I had got a better rate from Bank B because of my “good” credit history. The representative then requested that I give her a chance to offer me a better rate. I agreed. Only four hours later, I received a call from the representative and was pleasantly surprised when I was informed that Bank A would offer me a rate of 10.34% on the loan. This would result in an EMI of Rs. 13470. The lower EMI meant a total saving of Rs.25.604 over the 5 year term of the loan!

Needless to say I took the loan from Bank A and walked away quite pleased that my financial discipline had enabled me to earn a discount of almost 3% on my car purchase!

Volume 14

What is the Difference between an “Account “and an “Enquiry”‘ on my Credit Information Report?

The ‘Accounts’ section of your CIR contains existing and past credit facilities that you have availed from various lenders. For example, if you have a home loan and a personal loan, your CIBIL Report will reflect both accounts on your CIR along with details such as the name of the lender type of credit facility dates of opening and closing [if applicable] of each account. Current balances. Status of the accounts and your payment history Your CIBIL Report summarizes your credit behavior across these accounts for the last 36 months.

The `Enquiry section of your CIR will be populated when a lender accesses your CIBIL Report from the credit bureau in order to evaluate your loan application. If you have applied for a home loan of Rs. 1000000 then the `Enquiry’ section of the CIBIL Report will be populated to show the name of the lender you applied to, along with the enquiry date [date on which the lender has accessed your CIR]. Enquiry purpose in this case it was a home loan and the enquiry amount which would be for Rs. ‘1000000’ All enquiries made by lenders in the past are displayed here.

There is a critical distinction between an Account and an Enquiry in that the former denotes actual loan obligations that you currently are bearing while the latter denotes that you had applied for a loan or other credit facility from various Lenders. Given that open accounts have an impact on your ability to repay additional debt obligations, having many open accounts may result in your loan application being viewed negatively by a lender. This need not necessarily be the case if you have many enquiries on your CIR.

What is the deference between high Credit and sanctioned Amount On my CIR?

‘High Credit’ in the accounts section of your CIR is only displayed with credit card and overdraft accounts. It denotes the highest credit utilized in a single month over the life of that credit card. For example, 2 years ago I spent Rs. 75000 on some emergency medical treatment on my credit card [which has a credit limit of Rs. 100000. Given that was the single highest monthly balance in the history of my credit card usage, this is what gets reflected in my CIR. ‘Sanctioned Amount’ is displayed along with credit facilities other than credit card and overdraft accounts. The Sanctioned Amount field denotes the amount disbursed to you.

What does “Date Reported” Mean?

The “Date Reported” on your CIBIL Report indicates the date on which that information was reported to the credit bureau. Sometimes if a lender has stopped reporting information {say on a closed account, the date reported could be a year or more old. If your date reported on open accounts is not within the Last 3 months of the date of the CIR you should contact the bureau to get this updated.

Volume 15

Does holding multiple credit cards affect your credit history?

Holding multiple credit cards is not bad for your credit history. However, there are 3 factors pertaining to credit cards which may negatively affect your credit history;

  • Increasing Current Balance: The outstanding balances on your credit cards have been steadily increasing over the past few months. This implies that you are unable to pay down your credit card bills completely and hence, may not be able to service additional debt.
  • High Utilization: Your balances on these cards are very close to the “High Credit” reflected on your credit report. For example, if you have used Rs.‘90000 out of a credit limit of Rs. 100000 this may be viewed negatively by lender
  • Credit Account Mix: To be considered healthy, your credit history should contain a mix of a home loan, auto loan and a couple of credit cards. A high number of just credit cards may be viewed negatively by a loan provider. Why although A credit card offers Easy access to finance its also by far the most expensive form of credit, Hence, more the number of credit cards with high utilization, larger are the payments that the borrower has to make. This may result in the inability to service additional debt.

Even though you have relatively high number of cards, if you are not using them OR you use them & pay the bills on time, does it still affect your credit history?

Holding many unused credit cards may be perceived positively by loan providers while evaluating a loan application. This is because low balances on credit cards implies that you are easily able to service your existing debt burden and hence are likely to be able to sustain increased monthly outflows. Alternatively, given that past credit behavior helps a loan provider make an assessment of your future performance, using credit cards and paying your bills on time helps you build your credit history However, it is important to remember that credit cards are only one of the factors considered. The loan provider will also keep in mind your monthly income and the size and regularity oi other outflows from debt obligations such as home or auto loans before taking a decision on your loan application.

Is buying anything On EMI (Even if it is 0% Finance coast) better Option than paying in full as far as credit history is concerned?

If you have never taken a loan, and pay for your purchases in full you will not have a credit history. However as a rule of thumb, if you have loan related monthly outflows which are more than 50% of your monthly income. You are better off paying for your purchases in full if you can afford to. This is because loan providers may be reluctant to sanction a loan to someone who is already at a 50% EMI to income ratio because additional debt will be difficult for the borrower to make ends meet. However, the tender does consider additional factors like the size of the applicant’s income and number of dependents.