With the establishment of credit bureau like Credit Information Bureau (India) Limited (CIBIL), potential lenders now have easy access to information regarding your borrowing and loan repayment patterns. Watch out, your loan installment and credit card payment details are traceable now.
Credit bureaus 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?
Also known as ‘credit history’, this is a document that records details regarding loans taken in the past, the loan repayment, defaults, write-offs and settlements as well as your contact details. Lenders such as banks, financial institutions or non-banking finance companies have access to these reports.
Vital for creditworthiness
The credit report forms the basis of a lender’s decision to give you a loan. 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. Otherwise, you will find it difficult to get a loan or a credit card.
Am I on the list?
There is no way of knowing whether your name is on the defaulter’s list maintained by these credit rating bureaus. However, if your loan or credit card application gets rejected with apparently everything in place, it’s time to probe. If the rejection is due to defaults on your credit history, banks will give you the 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 the 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 provide you with the report on payment of a specified fee and after establishing your identity.
But it has not come into force as yet because the licence to issue a credit report to any entity other than a lender has still not been given to CIBIL under the CICRA 2007. But once, the provision for the Act is in effect, you can directly get a copy of your credit report.
You can ask for 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.
Just another beginning
If your name appears on 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 financial institutions that specialise in lending to people who have just come out of a bad credit situation. In India, such a class of lenders is yet to emerge. 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.
(The author writes for apnaloan.com)