What Banks Inform To Cibil – How Cibil Credit Score Gets Impacted By It

A CIBIL report basically is accurate information on the credit payment record of a borrower. CIBIL report is maintained by credit information bureau of India limited also known as CIBIL. This report is specially meant for all the member institutions of credit to help them know the repayment and financial status of any borrower who approaches them for a credit facility.

Credit report consist the information about all the loans and credit cards that an individual or a firm has from any of the member institutions. All this information is provided to CIBIL by the banks and other financial and non financial institutions who are members with CIBIL.

Banks uses this report to decide whether a credit facility should be given to a particular borrower or not. Financial institutions can judge the future prospects of payments by viewing the credit report of a customer.

Whenever a customer applies for a loan, credit card or insurance policy by a member, the institution firstly checks the repayment track record history of the individual in credit report.

If the payment status is regular and active then the application is eligible for fast approval and on a lower rate too. But at the same time, if therepayment track shows bounces and settlements in the cards and loans then the application may get rejected.

Sometimes a defaulter is also granted the credit facility, but at a very high rate of interest. This is because, any lending institution will not want to give money without getting it recovered. And so, the loan is approved on a higher rate so that, even if the customer fails to repay the loan after some months, bank has already recovered good amount of money through interest. Yourcredit report greatly affects your CIBIL score.

Reasons for Zero Score:

If there are no matches for any credit facility extended to you in CIBIL report then the credit score would be Zero or there would be no score.

Reasons for Low Score:

• Short age of reported accounts: If the average age of accounts reported in the report is reasonably short, then it means that all the credit exposure to the borrower is recent and the score would be low.
• If the recent repayment history in borrows account is not good or he has not made the payment due.
• Large no of enquiries – If there are large no. of queries made recently by the member institution for any credit facility applied by the customer, it lowers down the score.
• Large amount of credit exposure extended to customer recently will lead to a low score in CIBIL.
• Too many accounts showing in CIBIL report implies that the customer has very large credit exposure, exceeding his financial capability ofrepayment.

Reasons for High Score:

• If the average age of accounts reported in the report is more than 1 year, then you will have a good score.
• If the repayment history is good with no bounces then the score would be good.
• If there are less number of enquiries by the member institution for any credit facility applied by the borrower in last 12 months.
• If the amount of recent exposure is not too large.