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Cibil-TransUnion Score

According to the Cibil website,The Cibil TransUnion Personal Loan Score is the first and only score for the Indian market to predict the likelihood of an applicant or customer becoming more than 91 days delinquent on a personal or consumer loan over the next 12 months. This score is the result of collaboration between Cibil and TransUnion.

Though still in its nascent stage,more and more lenders now check credit history of a borrower before taking a final decision to lend.

In the developed markets a huge number of customers access their credit histories. According to a TransUnion whitepaper,Credit histories in US are available for more than 200 million consumers,helping them achieve their financial and personal goals. Businesses use automated quantification of consumer credit histories in the form of credit scores to make more efficient,objective decisions about whether to extend credit and on what terms for such services as credit cards,consumer loans,mortgages and even insurance policies.

Understanding credit score

Credit score can be obtained with a credit information report. Information included in a credit information report are: Name,date of birth,address and identification numbers like PAN number,passport number,voters number,telephone number,account information such as the type of loan taken home,auto,personal,overdraft,etc,the size of the loan,the current balance outstanding,overdue amount if any,number of days a payment is overdue if there is an overdue amount and so on.

It also provides information on the number of Enquiries made by the banks on the individual. An Enquiry is created on your CIR every time the lender requests the credit bureau for your CIR.

The crdit score,according to experts,is the result of advanced analytical models that take a 8216;snapshot8217; of the consumer8217;s credit report and translate it into a three-digit number representing the amount of risk a consumer brings to a particular transaction,such as financial,insurance or even employment. The credit score can range from a low of 300 to a high of 900.

The higher the score,the more favourably it is viewed by credit institutions. There are various factors which influence the score such as payment history,outstanding debt,length of credit history,number and types of credit accounts,utilisation and applications for new credit, according to Cibil. As a result of credit scoring,lenders can make faster,more objective decisions while retaining complete control over their lending decisions and set their own score levels called as 8216;application score8217;.

Importance of a credit score

However,if a customer accesses a credit information report along with a credit score,before applying for any loan or a credit card and finds a discrepancy in the credit report it will be prudent to approach the credit bureau and raise a 8216;dispute request8217; and get it sorted out.

Many a times even if a past due has been settled by a customer,it still reflects in the Cibil database and that would impact the credit report and credit score. This may lead to unnecessary delay or even rejection of the loan application by a lender. Lenders lend based on their risk assessment of a client. Lesser a credit score more is the risk it is taking on the borrower. Most of the banks are comfortable between a credit score of 700 to 750 and anything below 700 makes a customer riskier for them.

With the improvement in technology and increased knowledge sharing,it is possible for financial institutions to comprehensively check credit history of a borrower. This makes it all the more important to build a good credit history over a period of time. This can be done by following the repayment schedule of equated monthly installments EMIs strictly. Most of the discrepancies are found in relation to a credit card outstanding. It makes sense to make timely payments of credit card outstanding on time as even one mistake of not repaying would reflect on the credit information report. Even the background screening companies check credit records of a prospective employee to find out his/her behavioural pattern as that is reflected by the past credit history.

With a good credit score you can negotiate with a lender to give a better rate of interest as given your good repayment record a lender would categorise you into a 8216;less risky8217; customer and feel relatively safer to lend you vis-a-vis 8216;most risky8217; customer with a low credit score. A lender will check your credit history through accessing your Credit Information Report or CIR. While on one hand it helps a lender differentiate between those who have honoured their obligations responsibly and those who have defaulted,on the other it helps the borrower to negotiate better with the lender if his credit history is good.

ritukant.ojhaexpressindia.com

KEY TAKEAWAYS

Now you can get credit score with credit information report

A credit score denotes how risky a customer can be

Higher the score better it is

Follow your repayment schedule diligently to build a good credit history