Public and even Bankers are not aware of some of the bare facts about CIBIL Reports and CIBIL Scores. There are several myths associated with CIBIL Reports which need to be busted. Some of the common myths associated with CIBIL are the following:
- CIBIL maintains a record of Defaulters: Any customer who has opted for a loan or credit card will find details of his credit history with CIBIL but many wrongly believe that CIBIL has a record of defaulters. The truth is information about an individual’s credit history is collated to help him make informed decisions and avail cheaper loans. It is, by and large, the prerogative of the bank or financial institution to evaluate the CIR and credit score on the basis of their credit policies.
- CIBIL is meant to support banks and financial institutions only: CIBIL Reports and Scores not only help banks make financially viable decisions but also enable customers to maintain financial discipline and thereby increase their chances of loan approvals. CIBIL scores, therefore, make the process of loan approvals less opaque. Customers can avoid loan rejections owing to lack of a healthy credit history or missed payments since it reflects on their CIBIL score. The Prospective borrowers can consult professional CIBIL Consultants who will guide you to fine tune your CIBIL Report before approaching any bank or lending institutions for any type of Loan.
- CIBIL is fully authorized to make corrections in individuals’ Credit Report: CIBIL is not authorized to make any changes to an individual’s report unless approved by a bank or financial institution. CIBIL can, therefore, only help facilitate the process.
- Low CIBIL score = No loan or Credit Card for the lifetime: There are several lenders in the market with different and liberal credit policies. Chances are that your loan application may be rejected by one and accepted by another. However, if you have a low credit score, you may have to bear the brunt of high-interest rates and charges.
- Low CIBIL Scores Damage one’s Credit Reputation for Ever: A low CIBIL score is not set in forever. CIBIL scores will change as and when your credit history improves. Also, since banks and financial institutions request a CIBIL score only while evaluating an individual’s loan application, they will have access to latest updated information.
- CIBIL Scores are affected by Assets/Investments: A CIR comprises details pertaining to loans and credit cards. It does not factor in a customer’s investments, savings or current account. For instance, bounced cheques do not adversely impact one’s credit score. However, a missed EMI or credit card payment will affect the credit card score. However, some banks keep a record of Bounced Cheques themselves and do not entertain loan applications from borrowers whose cheques got bounced but other Banks do not have the record of bounced cheques.
- CIBIL scores are the only determining factor for evaluating loan application: CIBIL score helps banks assess risks and as a result enhance operational efficiencies and lower costs. In addition to their underwriting policies, lenders take into account several factors such as the income of the borrower among many others.
- Applying for loans hither or thither is Bad for your Credit Score: Many believe that applying for loans from multiple lenders increases the likelihood of acquiring a loan. However, several lenders checking out your credit history adversely affects your CIBIL score as part of a ‘hard’ inquiry. It is, therefore, important to ensure that you do not apply for loans simultaneously from multiple lenders.
- Zero credit is No Recommendation: Many believe that if they have never taken loans and their CIBIL or Credit Report shows NIL Report, it implies Good Credit Report. But it is not so. Lenders typically look for Responsible Credit Behavior and Regular Payments rather than No Credit Cards or Loans. A proven clean track record is the ideal scenario than No Credit History at all.
Still in Doubt? Just Tell us Your CIBIL Problem in strictest confidence. Whatsapp your Problem to +919814915812….Ashok Goyal, Retired Chief Manager, PNB and a renowned CIBIL Consultant.