Thursday, November 12, 2009

Credit Information Bureaus and 'CIBIL'

A credit bureau is a repository of credit information of all customers of its members, which comprises banks and financial institutions. CIBIL (Credit Information Bureau of India Limited) is one such organization that collates credit information contributed by its members and disseminates it to lenders, helping them in their credit-decision-making and lending process. CIBIL houses only credit information i.e. information on loans and credit cards. It does not have any details of customers’ savings accounts or fixed deposit accounts. Members share this credit information of their customers with CIBIL month on month so that CIBIL’s database is updated. This information is then used by credit underwriters to make effective credit decisions.
Therefore, with proper financial planning and by maintaining a good track record of repayment of dues for loans / credit cards, you will be able to build a good credit history for yourself. This, in turn, may help you in getting future loans / credit cards easily or on better terms.
Frequently Asked Questions
Is CIBIL the only credit bureau in the country?
Is CIBIL a list of defaulters?
Are all customers’ names reported to CIBIL?
On what segments does CIBIL provide a credit report?
What is the content of a CIBIL report?
How is a credit report helpful to credit underwriters?
How can a customer maintain a good credit history?
Who contributes credit information to CIBIL?
Do customers have access to CIBIL’s report through CIBIL’s website?
Can a customer’s name be removed from CIBIL’s database?
If a loan/credit-card application is rejected, will it be reflected in the credit report?
If a loan is denied to a customer by one bank on the grounds of the CIBIL report, will it be denied by other banks too?
If a customer’s family member has defaulted, will it affect the customer’s status in CIBIL’s records?
How many days does it take to update a customer’s payment status?
A customer complains that CIBIL’s report generated by X bank / financial institution does not show the details of other loans / credit cards that the customer maintains with other banks and/or financial institutions.

Is CIBIL the only credit bureau in the country?
As of September 2008, CIBIL is the only credit bureau in India. But some other credit bureaus are planning to set up in India soon.

Is CIBIL a list of defaulters?
No. CIBIL maintains account information of various loan customers and credit card customers, whether they are defaulters or not. The information comprises their name, address, monthly repayment track record, outstanding amounts, etc.

Are all customers’ names reported to CIBIL?
Only borrowal accounts, i.e. those customers who have availed of a loan or a credit card from a CIBIL member are reported to CIBIL. Details of liability accounts such as savings, fixed deposits and recurring deposits are not shared with CIBIL.

On what segments does CIBIL provide a credit report?
CIBIL is a repository of credit information and in the consumer segment it provides information on the various loans availed of and cards held by an individual from a member bank. Its commercial report covers the credit availed of by non-individuals.

What is the content of a CIBIL report?
CIBIL only reports loan and credit-card information such as repayment track, loan type, amount outstanding, loan amount disbursed, various dates, etc. The report also contains a customer’s personal information like name, address, date of birth, phone number(s), passport number, voter’s ID number, PAN, etc. In a commercial credit report the inputs are similar but include some additional details pertaining to the commercial entity like legal constitution, registration number, etc. The credit report does not provide any opinion or comment on whether a loan should be extended to a customer. It reports the facts that its member banks and financial institutions have reported.

How is a credit report helpful to credit underwriters?
The credit report shows account information such as repayment record, defaults, type of loan, amount of loan, etc. of the customer. This information facilitates prudent decision-making when the credit underwriter processes the loan/credit-card application.

How can a customer maintain a good credit history?
A customer will be able to build a good credit history by proper financial planning and by maintaining a good track record of repayment of dues for loans / credit cards.

Who contributes credit information to CIBIL?
The information is contributed by banks and financial institutions that are members of CIBIL.
Do customers have access to CIBIL’s report through CIBIL’s website?
No, at present customers do not have access to CIBIL’s website to be able to generate CIBIL’s report

Can a customer’s name be removed from CIBIL’s database?
Member banks contribute to CIBIL on a monthly basis data of all their customers who maintain a loan/credit-card account with them. Hence a customer’s name cannot be removed from CIBIL’s database.

If a loan/credit-card application is rejected, will it be reflected in the credit report?
A credit report reflects only credit information reported by member banks. Hence, details of loan applications are not available in the credit report. However, information about the number of times a CIBIL report has been generated can be obtained from the “Enquiries” section in the CIBIL Report.

If a loan is denied to a customer by one bank on the grounds of the CIBIL report, will it be denied by other banks too?
Approval or rejection of a credit application depends on the bank’s policies. Rejection by one bank on the grounds of the CIBIL report might not imply rejection by another bank.

If a customer’s family member has defaulted, will it affect the customer’s status in CIBIL’s records?
The CIBIL report has information of loan/credit details of the borrower only. Therefore, for a retail customer, it would not matter if someone in his/her family has defaulted. If the customer’s repayment track record is okay, his/her credit score will not be affected by that of his/her family members.

How many days does it take to update a customer’s payment status?
Customers’ account information is sent to CIBIL month on month for update into CIBIL’s database. It takes generally 45-60 days from the month-end to update the record in CIBIL’s database.

A customer complains that CIBIL’s report generated by X bank / financial institution does not show the details of other loans / credit cards that the customer maintains with other banks and/or financial institutions.
CIBIL’s report generated by X Bank will show all the loans/cards relations the customer has with various banks, but without the identities of the other banks being indicated. In other words, X Bank officials will not know the name of the other banks with which the customer has loans/cards relationships. The names of the other banks will appear as “Not Disclosed”. This has been done to ensure privacy. However the customer can contact CIBIL at info@cibil.com with the enquiry control number of the credit report (provided by X Bank) to find out the details of the member bank that has reported a particular transaction.

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