Credit Information Report (CIR) has become very important in the recent past largely due to defaults on payments made by the borrowers, leading to huge losses suffered by Banks and other Financial Institutions. It is being observed that Banking institution are under stress as Non Performing Assets (NPA’s) continue to rise. This has lead to lending institution being very stringent with their norms for granting loans. Credit Report helps to establish the Credit worthiness of an Individual.
Credit Information Bureau India Limited (CIBIL) now known as TRANSUNION CIBIL Limited, maintains and provides record of the past financial transactions and credit history of an Individual or Firm which helps the Banks and Non Banking Financial Companies (NBFC) to decide on their respective loans and credit card applications.
Credit Information Bureau India Limited (CIBIL) came into existence in the year 2000. It is the first Credit Information Company (CIC) setup in India. It is a private body founded by consortium of Banks led by the TransUnion International which is a leading Global Credit Bureau company with presence in around 33 countries and renders service to 500 million consumers worldwide. Currently, only 4 Credit Information Companies (CIC) has been given the license to operate in India. TransUnion CIBIL is oldest and largest CIC in the country.
Credit Information Companies (CIC) are governed by Credit Information Companies (Regulation) Act, 2005 issued by Reserve Bank of India (RBI). So, RBI directly is not involved with the CIC’s but regulates their workings through the Act. CIBIL is not a regulatory body, it is a credit information providing firm which prepares report based on the data received from various financial institutions. This helps in faster approval of loans and credit card of Individuals at attractive lending rates.
Objectives of TRANSUNION CIBIL
#Collaborate and collect all credit related data from the market and create a Credit report. To provide all relevant information regarding the credit history of the loan/credit card applicant to the Lender.
#Bring transparency and help Lenders evaluate the credit worthiness of the applicant.
#Credit Report and Credit Score to help the lenders to determine the eligibility of the Applicants and the quantum of loan or credit limit which can be extended to an Individual.
#Speed up the Loan Approval process for the borrowers and mitigate the risk of the lenders by providing detailed financial reports.
Functions of TRANSUNION CIBIL
CIBIL’s primary role is to bring transparency by providing factual report to the concerned entities relating to the previous financial dealings and credit history. The database contains the all the details of past financial transaction such as Loans taken, repayment of loans, duration and delay in repayment of loans and other relevant credit details. These information help lending institutions to decide on the credit worthiness of an Individual while deciding on their loan or credit card application.
It collects data periodically from the different Banks and Financial Institution and the same is used to prepare the Credit Information Report and Credit Score, which helps the financial institution to evaluate the loan and credit card applications.
After accessing the past credit record and transaction summary, a Credit Score is provided to the concerned Individual. The lenders use this Credit Score as an important parameter to decide on the loan and credit card application. It helps them to evaluate the credit worthiness and amount of loan or credit card limit which could be extended to an Individual. It also helps to determine the time Individual might take to repay the loan.
Credit Score is prepared after considering various financial aspects, such as existing Secured and Unsecured Loans, repayment record, duration of loans, requirement of Credit.
Need For CIBIL TRANSUNION Score
CIBIL TransUnion Score is now one of the important benchmarks for the lenders when it comes to deciding on the loans and credit card applications.
CIBIL TransUnion score is provided to Individuals based on their credit history. The score ranges from 300-900, with higher score showing greater credibility and less risk. Even Individuals with credit history of less than 6 months are evaluated and risk index is provided for them. Any score above 750 is considered to be respectable by the lenders.
If an Individual wants to apply for Loan or Credit Card, he/she is free to do so but the Lender or Credit Card providers would like to check their CIBIL TransUnion Score before proceeding with the application. If the CIBIL TransUnion Score is on the lower side, it is very likely that the application will be rejected. Therefore, it is very important to keep the credit history as clean as possible.
A Healthy CIBIL score ensures that one’s loan and credit card application is processed at the earliest and without hassles provided other required documents are up to date as per the guidelines. It also enhances the probability of getting higher amount of loans at discounted rates.
How and Where Can You Get Your CIBIL Score?
Individuals may check their Credit Report for free once every year by visiting the portals of the four credit bureaus operating in India, namely, TransUnion CIBIL, Equifax, Experian and Crif Highmark. Reserve Bank Of India has mandated to provide one free Credit Report in a year to enable Individuals understand their Credit worthiness. Individuals need to provide some basic information to obtain their Credit Report. Third party vendors like Paisa Bazaar and Credit Mantri also provide free credit report.
The link for CIBIL portal is provided below, one may check their CIBIL score on the portal:-