1. What is a Credit Bureau?
A credit bureau is a centralized information repository that provides information on credit history, borrowing, repaying and bill-paying habits of individuals and organisations.
Data collected from banks and other financial institutions are maintained in the Credit Bureau to track credit behavior of consumers and companies. This data helps in assessing their credit reputation while lending them money.
The credit bureau in India is licensed by the Reserve Bank of India and is governed by CICR Act 2005.
2. What is CIBIL? Is it the only Credit Bureau in India?
Credit Information Bureau India Limited or CIBIL is the first credit information company (CIC) in India, which started maintaining a centralized information repository on credit histories of individuals and companies.
It maintains a record of repayments made by individuals or companies with respect to loans and credit cards. Banks and other financial institutions submit the borrowers’ repayment records to CIBIL every month. CIBIL then uses this information to create credit information reports (CIR) for companies and credit scores for individuals. These scores are analyzed by lending institutions and banks, while evaluating or approving loans to individuals or organisations.
Other than CIBIL, Equifax, Experian and High Mark are the other three credit bureaus in India. As per the CICR Act 2005, it is mandatory for all lending institutions to report their data to at least one of these four bureaus.
3. What is a Credit Score?
A credit score is a three-digit numeric value, ranging from 300 to 900, indicating the credibility of an individual or company as a borrower. It essentially indicates the ‘probability of default’ of a consumer on the basis of his or her performance in the past 12-months.The higher the credit score, the higher is the person’s or organisation’s chance of obtaining loans from banks and other lending institutions.
The main parameters that determine the credit score include payment history, credit utilization, length of credit history, etc. The credit score provided by CIBIL is called CIBIL TransUnion Score and is a sole proprietary of CIBIL, with its member institutions having no role to play in the assessment of score.
4. How does a credit bureau report a customer’s details?
The lending institution from where you have taken a loan or credit card, reports data related to your borrowings, payment history, regularity in payment, etc. to a credit bureau. This data is reported on a monthly basis and the same gets updated in the database of the credit bureau. Based on this data, the credit bureau calculates your credit information report (CIR) and credit score. This report primarily consists of information related to the loans you have taken, your credit card spends, monthly payment track records and outstanding amounts across different banks and financial institutions.
When you approach a lending institution for loans, that institution refers to your CIR or credit score and assesses your credibility and worth for the amount you have asked to borrow.
5. Does CIBIL keep a track of every person’s credit history?
Yes, CIBIL maintains the account information of every individual or company that has availed loans or credit cards from the lending institutions registered with it, irrespective of their default status.
6. Who provides credit information to CIBIL?
Banks and other financial institutions that are registered with CIBIL provide the credit information about their respective borrowers.
7. Are all customers' names reported to CIBIL?
Only the customers who have applied for or availed loans or credit cards from the institutions registered with CIBIL are reported to CIBIL. Details like saving account information, fixed deposits, recurring deposits, etc. are not shared with CIBIL.
8. Does the credit bureau decide whether its member organisations should lend or not?
No, the analysis provided by CIBIL or any other credit bureau is only a statement of facts based on the data provided by its member institutions. The decisions regarding approval of loans or credit cards are solely taken by the member organisations as per their own set of parameters.
9. What are the different components in a CIBIL credit report and how can I understand it?
The credit information report (CIR) provided by CIBIL consists of information related to repayment trend, types of loans, outstanding amount for payment, loan amount disbursed, etc. with respect to different credit facilities you have availed like, home loan, personal loan, auto loan, credit card, overdraft, etc.
This report also consists of your personal information such as name, address, date of birth, phone numbers, passport number, voter's ID number, PAN, etc.
Please click here to learn more about how you can read a CIBIL CIR effectively
Commercial entities get commercial credit report from CIBIL, which is similar to CIR for individuals. It consists of all information, included in CIR, along with additional details about the commercial entity like legal constitution, registration number, etc.
Your credit history determines your credibility as a borrower, influencing the amount of loan you can avail through a lending institution. Better credit score attracts better loan amounts and favorable interest rates. If you have been a defaulter anytime, then it gets reflected in your credit history, lowering your credit score, thus, hampering your prospects as a borrower for a new or continuing credit.
10. How is the score related to a loan?
The CIBIL TransUnion Score, along with other variables like balance on other loans/cards of the customer, is used to evaluate the credit worthiness of a customer. Based on the payment track-record, the score predicts the likelihood of a default by a consumer. A large number of lending institutions use the credit score as one of the determining factors to evaluate the credit worthiness of a customer. A robust credit history and hence a higher CIBIL score enhances the possibility of getting promising credit facilities.
11. How can I improve my score?
By being regular and disciplined in making your payments and settling all outstanding charges against your name, you can improve your score.
For more information, please visit: cibil.com/faq/credit-score-and-loan-basics.
12. Can I access my credit score and report through CIBIL's website?
Yes, you can access the CIBIL TransUnion Score and credit information report from CIBIL. There is a fee charged for the reports and you have to follow the verification rules, as laid by CIBIL, before you can access the information. You can get complete information on payment charges and verification rules on CIBIL website. Please click here to read the information. Any dispute in the CIBIL report can be addressed to CIBIL and directly reported to the respective bank or financial institutions.
13. What shall I do, if I find some inaccuracy in my CIBIL report?
We encourage you to check your credit information report (CIR) on a regular basis to ensure that there are no inaccuracies. CIBIL reports are based on the data provided by member institutions and hence CIBIL cannot make any change in the CIR on its own. Any correction in the CIR should be confirmed by the respective bank or financial institution.
To understand more about incorrect reporting in CIR and dispute resolution, please click here.
14. Can a customer's name be removed from CIBIL's database?
Member banks and financial institutions have to share the credit information of all their customers with CIBIL, every month. No exclusion to this reporting process is allowed.
15. If a loan or credit-card application is rejected, will that reflect in my credit report?
A credit report reflects credit information reported by member banks or financial institutions. Hence, the details of loan or credit card applications, which have been rejected, are not available in the credit report. However, you can find out how many times your CIR or commercial credit report has been enquired by a member bank in the ‘Enquiries’ section in your report.
16. How many days does it take to update a customer's payment status?
The customer’s account information is sent to CIBIL once every month. It generally takes 45 to 60 working days to update this information in CIBIL database.
17. Can a customer's repayment track be overwritten in credit bureau’s data base?
Member banks and financial institutions send their customer data to CIBIL every month. In case of a delinquent customer, if all the outstanding payment has been made in the current month, the same will be reflected in subsequent reporting to CIBIL. However, the CIBIL records for the previous months will continue to show the payment behavior shown by the customer.
18. If a loan is denied to a customer by one bank on the grounds of the Credit report, will it be denied by other banks too?
Approval or rejection of a credit application solely depends on the credit policies of respective banks and financial institutions. Rejection of a credit application by one bank on the grounds of the credit report might not attract same result by another bank.
19. Does my CIBIL report generated by ‘X’ financial institution for enquiry show the details of other loans or credit cards that I maintain with other banks and/or financial institutions??
CIBIL's report generated by ‘X’ institution to evaluate your credit worthiness will show all the loans or credit cards you have availed with various banks, but without the identities of the other banks being indicated. In other words, ‘X’ institution officials will not know the name of the other banks with which you have taken loans or credit cards. The names of the other banks will appear as ’Not Disclosed‘. This has been done to ensure privacy. However, if you want complete details on your credit report, you can do so by logging on to cibil.com and purchasing your CIBIL TransUnion Score and CIR.
For further understanding or enquiry on your credit report, please
a) Visit cibil.com, or
b) Contact SBI Card