You must have seen a popular advertisement on TV. A prominent businessman comes to a bank seeking a loan. He expects the bank to give him the Royal Treatment. A salaried employee comes to the bank and shows off his Cibil Score. Guess what…It’s 750. The bank manager calls this employee even as the businessman is kept waiting and surprise…he gets the Royal Treatment. His loan is sanctioned even as the businessman looks on in amazement. This is the power of cibil.
Credit Information Bureau (India) Limited or CIBIL, is a credit information Company. Banks send the details of your loan repayment, to Cibil each month. Based on your repayment history, you are given a Cibil TransUnion Score between 300 to 900. A score of 750+ is great. Your loan could be sanctioned in no time. If you fall behind in your loan repayments or default on your loan, your cibil score is badly affected. You get a bad cibil score. Say bye bye…to that home loan, personal loan…whatever loan.
You know what cibil is and how important it is, to have a good cibil score. Do you know there are a number of myths on cibil, which are equally popular? Let’s attempt to dispel some of these myths on cibil.
Your friends have told you that every time you apply with cibil to check your cibil score and your credit information report (CIR), you get a negative marking. Your cibil score goes down. You so badly want to check your cibil score. But what if…..
When you check your own cibil score, it is considered by banks as a “soft enquiry”. A soft enquiry does not affect your cibil score. It is a very good practice to check your cibil score at least once a year. Check your credit information report (CIR) thoroughly, to make sure all the loans availed, are in your name. This is very essential to make sure that fraudsters have not taken a loan in your name. Fraudsters could avail a personal loan in your name and you get a poor cibil score. So when does your cibil score get affected? You keep applying for a loan or a credit card, at a number of banks. Banks request cibil access to your CIR (credit information report) and your cibil score called a “hard enquiry”. This hard enquiry gets recorded in the enquiry section of your credit report. You keep making enquires in succession with banks for a loan or a credit card. This increases the number of hard enquiries, in the enquiry section of your credit report. If you exhibit this kind of behavior, banks view you as credit hungry. It shows you need a loan desperately. This affects your cibil score.
You believe that cibil is the only credit bureau around. There are no other credit bureaus.
Sure, Cibil is the most popular credit bureau, but not the only credit bureau. Apart from cibil you have Equifax, Experian and CRIF High Mark. These credit bureaus are licensed to operate by RBI. Cibil is the oldest credit bureau around. Cibil score is unique to cibil. In the same way Equifax or Experian have their own credit scores.
You have never availed a loan or a credit card. You are a common middle class man, who believes that availing a loan or a credit card, is bad for your financial health and general health too. You just hate loans and credit cards. You must be having the perfect cibil score.
You do not borrow. You do not have a credit history. You do not have a credit score. This might not necessarily be a good thing for you. Banks are hesitant to lend to first timers, who have no credit history. How would the bank know if you will repay the loan or not? Tomorrow you need to avail a home loan, but the bank will not sanction it, without any credit history.
You have a low cibil score. You have heard it’s impossible to improve your cibil score. Is this true?
No, this myth is definitely false. You can improve cibil score with good planning and financial discipline. Be sure to repay your loans on time. If you have delayed your loan repayments and have a bad cibil score, this is not the end of the road for you. Start repaying your loan EMI’s in time. With time your credit score should go up. If you are not able to manage your loan repayments and have a bad cibil score, seek professional help. There are professional credit health management firms, which help you, manage your debt and improve your cibil score for a fee.
Time to say bye bye to the World of Myths….Live in the Real World.
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