Harshala Chandorkar, chief operating officer, CIBIL, explains your rights and duties as a responsible consumer
Finance is the fundamental requirement for individuals and enterprises to grow. Today we have the freedom and opportunities to access finance for our goals and economic development in the form of loans and credit cards. Banks and lending institutions are willing to provide loans to individuals to fund their education, buy a house, car or even a holiday overseas.
A vibrant lending culture is gradually bringing more and more people under the umbrella of banking and credit operations. Both the government and the private sector are working towards making credit opportunities available to one and all, so that access to finance becomes easier by the day.
While the focus on credit penetration has increased, credit institutions are diligently assessing borrowers' credit worthiness so that the quality of credit doesn't suffer. Thus, the need to have a clean credit history is of utmost importance for any credit aspirant, as without one, there is possibility of being denied fresh lines of credit.
A good CIBIL Score and Report is important for the following:
- Home loans, education loans, credit card and personal loans may not get approved if the financial institution feels your CIBIL Score and Report is not up to the mark
- You may have to borrow at a higher rate of interest from other financial institutions
As a borrower these are some of the cardinal duties you need to follow to maintain a sound credit health:
Make payments on time
This is the first step in maintaining a healthy CIBIL Score and Report. Whatever you owe in the form of loans or credit cards, if you continue to pay on time, there is a high possibility of maintaining a good report and score. If you cannot pay the entire sum at one go, make the minimum monthly payment that the credit card bill mentions below the total outstanding in a monthly statement.
If you have a payment issue on your home loan or credit card payment, contact the financial institution for a solution. It is prudent to keep your creditors informed about any payment issue you might face so that they can help you by offering easier terms and options for repayment.
Monitor loans you have guaranteed, co-borrowed or co-applied
In case you have guaranteed a loan taken by a relative or spouse, you must monitor if the principal borrower has been repaying on time. Though the loan is not in your name, technically by being a guarantor you have signed for paying up the dues in case there is a default. So any delay or non-payment will affect your CIBIL Report and Score.
At the same time, if you are a co-borrower, you must monitor your partner's payment behaviour. Though you pay on time, if the other person doesn't pay, it will still affect your credit report and score directly as you are one of the borrowers.
Review your credit history time to time
To be able to access credit without any hindrance or delay, you must check your CIBIL Score at regular intervals, like once in six months at least. It is better to take corrective actions in case the CIBIL Report shows any deviations.
If one follows the above-mentioned as a rule of thumb, s/he in all likelihood will have a good CIBILscore.
Checking CIBIL Score should be treated as a credit health management exercise, and not only as one undertaken when you need loans. As a customer you must understand your rights too and exercise them if required.
Raise a dispute if you find incorrect information on your CIBIL report
If you find any incorrect information or discrepancy on your CIBIL Report you must raise the same with CIBIL. You can go online and raise the issue by filling the online dispute form. It is very important that you take corrective actions before it is too late and your credit worthiness is affected.
You deserve a clear explanation on why your loan was rejected
If a lender rejects your loan, it is well within your right to seek an explanation. This will help you understand what the core reason for rejection is and make course corrections accordingly. If the lender cites your CIBIL Score and Report as the reason for loan rejection then you can request them to provide a copy of your report and score. This exercise will help you prepare better for future loan approvals.
Information and guidance on improving your CIBIL Score and Report
As a borrower you should seek information and guidance on improving your CIBIL Score. The CIBIL website has a section that has information on improving credit score. Besides that a lending institution also should help you understand what impacts your credit worthiness and how you can better it.
Seeking information and guidance on improving your credit score and report is your right. A healthy CIBIL Report and Score is your key to accessing finance when you most need it.
Illustration: Uttam Ghosh/Rediff.com