Being credit healthy is the key to an individual’s financial fitness and in today’s times is an important aspect that cannot be overlooked. Whenever you apply for a loan or credit card, the first piece of information that a lender considers is your credit score, an integral part of your credit report. Not just restricted to loans any more, globally credit scores are used by telecom and insurance companies to evaluate prospective customers as well as employers as part of the hiring process. Landlords too factor in the credit score when deciding whether to rent out property to an individual.
What is a credit score? Does it differ from a CIBIL score?
A three-digit indicator ranging between 300 and 900, a credit score tells a lender about an individual’s creditworthiness, and whether lending to a person would be risky. Higher your score better are the chances of your loan or credit card application being approved. A credit score is generated by a credit information company, or credit bureau, based on the information provided by its members (banks and financial institutions).
In India, there are 4 credit bureaus licensed to operate by the Reserve Bank of India, namely CIBIL, Equifax, Experian and CRIF High Mark. Of these,the oldest bureau of them is CIBIL and hence credit scores are often called CIBIL score colloquially. However, all bureaus generate scores, and you can avail of a report from any or all of these bureaus.
What is a CIBIL defaulter list?
When a person defaults on a loan, i.e. fails to make payments towards EMI or does not pay off credit card outstanding, it eventually becomes a payment default. Categorised into buckets, a lender will take increasing action as the number of days past due also increase.
When an individual defaults, the lender puts them into a loan defaulter list, which may then make it difficult to avail of credit subsequently. These lists are often shared with other financial institutions as well.
However, CIBIL itself does not maintain a loan defaulter list. This is because CIBIL does not generate the information in the CIBIL report itself, it is based on what its members i.e. lenders provide. Hence, CIBIL will neither modify information in the report of its own accord, nor classify any customer as a defaulter.
If you wish to get your name struck off from the lender’s loan defaulter list, consider getting in touch with the lender and working out a suitable repayment solution. What you would then need to do is contact the concerned credit bureau (where the data has been reported) and file a dispute.
How do you raise a CIBIL dispute?
The first step would be to call for a copy of your CIBIL report, at a nominal fee. With a quick and hassle-free process, your credit report would be delivered to you within a short time span. Once you have the report, go through it at length and check for any discrepancies. Remember, every small error in your credit report can have a negative impact on your score; hence it is imperative to ensure that all the data contained in the report is accurate.
There can be various types of inaccuracies in a report, for example, basic information such as your name or date of birth could be incorrect. However, what impacts your score is incorrect account information, and this requires immediate rectification. Let us assume there is a loan account on your report that you are not aware of: you could well be a victim of identity theft in this instance, wherein your personal information has been used to avail of a loan by someone else. However, any default in payment on such a loan will continue to reflect on your credit report. It is also possible that owing to an ongoing dispute with a credit card issuer, you have not made a payment as per the due date. However, even after settlement of dues it is possible that the credit report shows a skipped payment, as the records have not been updated.
How is a CIBIL dispute resolved?
When you identify an error in your report, contact the credit bureau at once. With easy to access online dispute redressal mechanisms, it is easy to initiate the process. Of course, do remember to have concrete proof – such as a payment acknowledgement from the lender – when you file a dispute. CIBIL will then take this up with the concerned lender, and depending upon the lender’s decision (whether to accept or reject the dispute), corrected data will be sent back to CIBIL. This entire process can take up to 30 days, depending upon the time taken by the lender to revert to CIBIL.
Seeing the necessity of maintaining a clean and good credit history, you should check your report at regular intervals and ensure that there is no incorrect information therein. Else, do make sure that you raise a dispute and have the same rectified, in order to be able to avail of the best credit solutions when you actually do require them.