As a consumer in India, you may have heard about the importance of your credit rating with CIBIL. CIBIL is the main credit reporting bureau in India, and the acronym stands for Credit Information Bureau India Ltd. The bureau was established in the late 1990s by the Indian government and the RBI. CIBIL is responsible for compiling your financial records and generating your credit rating. This credit rating can affect your life in numerous ways, so it is important to fully understand the function of CIBIL and how you can take control of your credit rating.
What Does CIBIL Do?
CIBIL is an entity that is tasked with the responsibility of collecting financial records from various institutions and compiling them into a report format. The information collected by CIBIL may include data from banks, financial institutions and other creditors and generally only includes debt accounts such as credit cards and loans. CIBIL typically updates its financial data on individuals approximately every month. Because of this, your CIBIL credit rating may be accurate, but it may not be fully up-to-date based on real-time information. For example, if you paid off a loan account last week, it may be several weeks before this information is reflected on a CIBIL credit report.
What Information Is On Your Credit Report?
The CIBIL credit report contains a considerable amount of detailed information about your financial records. Most individuals as well as lenders initially focus on the credit score. The range of CIBIL TransUnion credit scores will fall between 300 to 900, with the higher rating being preferable. Most lenders look for a credit rating above 700 when analyzing a loan or credit application. However, a credit report will contain other personal information. This may include various identity numbers like your passport identification number, your voter identification number and your D-U-N-S number. It will also contain your full, legal name as well as your birth date and your current address. A considerable amount of financial account information is included on the report. For example, most or all of your loans, credit cards and other accounts will be listed along with your payment history and past due amounts will be shown. Other information will also be shown, such as your suits filed status and the number of inquiries made into the credit report about you. This is a fairly complete overview of your financial records.
How Can You Review Your Credit Report?
With so much information about your financial status reflected on your CIBIL credit report, it is understandable that you would want to review the information yourself. CIBIL will provide individuals with a copy of their credit report on request. You can visit the CIBIL website at www.cibil.com to learn more about the steps required to obtain a copy of your credit report.
Why Is It Important to Review Your Credit Report?
While some people will request a copy of their credit report from CIBIL out of curiosity, the fact is that there are good reasons why you should review your credit report annually. The fact is banks, financial institutions and others review your credit report each time you apply for a loan or credit account. You want to ensure that all information reflected on this account is truthful and accurate. Reviewing your credit report may help you to discover a case of fraud or mistaken identity, but it can also reveal unintentional errors such as numbers being entered into the system wrong or payments not being posted to your account. Furthermore, your credit score is a reflection of your financial health. By reviewing your report regularly, you can determine if you need to adjust spending and savings habits to improve your financial situation.
What Should You Do If There Is an Error On Your Credit Report?
It is unfortunate but true that some Indians will discover an error on their credit report when they receive their report from CIBIL. CIBIL provides you with an easy way to begin the process of resolving discrepancies. On the CIBIL website, you can complete a Dispute Request form online. Once your Dispute Request has been filed, CIBIL will research the information and will make the changes based on its research findings.
How Is Your Credit Score Calculated?
Many consumers are interested in learning more about how their credit score with CIBIL is calculated. The fact is that numerous factors are considered and analyzed to determine your credit score. A complicated analytical formula is used to review everything from your number of open accounts, the ratio of your outstanding debt to the available credit limit on your accounts, how many late payments you have had and other information. Because of how complicated the analytical system is, it is best to focus on keeping debt balances low and making payments on time if you want to improve your credit rating rather than trying to tweak your score based on small details.
How Can You Improve Your Credit Score?
If you have pulled your credit report from CIBIL and are not pleased with your credit rating, you may be interested in making changes to your finances to improve your credit rating. While most banks and lenders want to see a credit score over 700 when extending credit to you, most have a graded system that offers the best interest rates and loan terms to those with superior credit. Because of this, it is in every consumer’s best interest to regular strive to improve their standing. There are a few key things that you can do to improve your credit rating. For example, you can start making an effort to make all of your payments on time. Reducing account balances rather than increasing them can increase your credit score. Secured loans like home loans and auto loans are viewed more favorably than credit cards and other types of unsecured loans, so readjusting the structure of your debt may be beneficial. The number of inquiries into your credit rating may also affect your score, so avoid applying for new credit more than necessary.
Understanding your CIBIL credit rating is important. Now that you understand how your score is calculated and why it is important, take the next step and order your credit report through CIBIL today.