Credit Report

Some time back I wrote about The Big Brother is watching referring to the CIBIL, which has started operating in India and how it is impacting and has slowly entered our life without most of us realizing it.

I would like to be candid here, I own stocks in banks and don’t like when the NPA for the bank that I own go up. So I am on the team of the bankers, but that does not mean that cease to be a responsible consumer. Bye the way if one takes a loan from a bank and does not pay up then after a time the bank has to classify these loans as NPAs or Non Performing Assets as per RBI guidelines.

In order to experience the services of CIBIL I decided to order my own credit report from it. Now CIBIL is giving the retail consumers their credit report on producing proof of identity and PAN Card. You can make the payment online ( Rs 142) or send a DD to their Bombay address ( I am old enough to remember the city being called Bombay instead of Mumbai! ).

So I went to CIBIL website, paid the fee and downloaded the form. Attached it with a self attested copy of my PAN card and Driving License and couriered it to the Mumbai address of CIBIL.

Then came the waiting, I had to call their office 3 times, but the experience was not bad, Each time I got to speak to Joann, and I wondered if every girl in CIBIL office is called Joann or they have only Joann answering the phone. Any ways this will remain one of the mysteries that I will never be able to solve unless she reads this blogs and replies.

What Joann told me each time in her sonorous voice is that the volume of request for credit reports from individuals is very high and I will receive it in another 10 days.

Finally I got the credit report about 15 day from my last call. I must confess I was not very happy on receiving it. Don’t get me wrong my report is fine (as if it is my X-Ray report), I was wondering that now I will have no reason to call and speak to Joann. (God for a change I wish my wife is not reading this).

Any ways before you guys think I am a lousy financial blogger and even lousier humor blogger and (let us not talk about a romantic blog) let me come back to the track of CIBIL report.

My Credit report came with clear instructions on how to read it and every single abbreviation was clearly explained in very simple terms.

What surprised me most was that it even had the first loan I took as a long time back in 1992 for a Bajaj Scooter. ( Will write about that experience in some other blog)

So from 1992 onwards every single personal loan, credit card, car loan and home loan was listed in the report.

It gives the following information:

• Date loan was sanctioned.
• Amount of original balance
• Current status (Open, over due, paid off etc.)
• For credit card it showed the highest amount of balance that was payable on the card in its history.

It even showed the unwanted credit cards that I received in mail when credit was easily available. Though I have never used these cards but they were showing on my credit report. Fortunately all of them were shown as closed accounts.

So here are the lessons learned from the credit report.

Cibil has the records at least as back as 1992, going by my credit report. ( I don’t think I had a PAN card back then but the records are there with CIBIL). Even if you have not applied for a credit card but you received on in mail you need to make sure that it has been deactivated.

So next time you want to apply for a loan it would be a good idea to proactively get your credit report and see if you have every thing in order.

Here are the advantages of getting your credit reports.

You will come to know if all the loans that you took and paid off are appearing as paid off. This becomes more important if you have closed some loans after reaching some kind of agreement with your bank. As the bank may have settled the loan with you but may still be showing the loan as open in CIBIL report.

In case you find any loan/cc that is not yours or is showing some wrong entry etc. then you need to get in touch with the concerned bank/financial institution and get it rectified citing the CIBIL report.

There is also a possibility that you may find a loan in your name that you have never taken. This would be a case of Identity theft and means some body else has taken a loan using your name. This is a serious crime and is common in countries like US etc. In India it is not that prevalent but I am afraid our criminals will catch up with US in this field also.

In countries like US even small items like parking tickets, utility bills etc are also reported to the credit bureaus. I am sure soon it may start happening in India also. Telecom companies have already started giving a dynamic credit limit on your SIM card in case of post paid customers. This is a first step towards monitoring the spending and payment habits of its customers.

The advantage of knowing your credit report and rectifying the same is that you can negotiate a better interest rate in case of big ticket loans like car loans and home loans if you have a clean credit report. If some small item is pending on your credit report it makes sense to take care of the same so that your record is clean and next time when you need a loan the banks will process your application quickly and give you a good deal. Just to give you an example for one of the personal loan I took from a leading bank I was able to negotiate the interest rate from 15% to 13.5 % per annum and processing fees from 2500 to only Rs. 500/-. That is the advantage of maintaining a good credit history.

Thanks for reading. Would love to hear from you.