What is CIBIL?
CIBIL stands for Credit Information Bureau of India Limited, it is India’s first credit information and the credit bureau. It maintains the record of all the credit-related activities of the individual which are submitted to it by various member agencies and banks. These credit activities include the bad credit loans, credit card activities, payment of dues, timely payment if bills and loans which are acquired by various people over time. These records are submitted by registered banks and financial institutions which are then arranged and maintained by CIBIL on a monthly basis and based on which the CIBIL issues the monthly credit information report.
The CIBIL has two areas of focus which are the customer area where the CIBIL focuses on the payment and dues of the individuals and maintains the record of their credit. The other area of focus is the commercial bureau where the CIBIL looks after the loans and credit of big financial institutions, companies and organizations.
What is a CIBIL report?
A CIBIL report is a comprehensive document and detail of person’s credit history. It may contain all the information about loans and their dues, any mortgage or any other type of financial information which is reliable for the future assessment of the credit credibility of the individuals. The CIBIL report is a very credible document which is been asked by almost all the banks when they sanction any loan or allow the credit card facility to the customer. By looking at the CIBIL report of any customer one can easily see for the past history of the individual and his/her accountability over the loan. The details in the credit report includes:
- Your personal information
- Employment details and income
- Number of hard enquiries made by the lenders on receipt of your loan
- Information on past and current loans with your payment record
- Any defaults on loan
- Any settled loan
- Total credit limit and the amount spent monthly
- Any credit card payment defaults
- Credit Score
The credit score is the most important element for loans for people bad credit as any bank or lending institution will lend the loan on the basis of your credit score. The credit score should be very high to avoid any type of difficulties in future for applying for loans. The various methods which can be implemented for a good CIBIL score are –
The punctuality in the payment of your bills is a very important factor in the increase of your credit score. When you pay your bills and the outstanding amount on time then the credibility of the lender increases upon you and it reflects positively over your report. Thus all the bills and the dues or instalments should be paid timely within the given time frame
2. Minimum Credit Utilization
Most of the people are in the wrong conception of the maximum utilization of their credit limit because they think that the more they will use the services of the credit card the better will they be rewarded based on that. In reality, the credit card ratings and the credit score works the principle of minimum usage and thus you should use your credit card only when necessary.
3. Credit MonitoringChecking your credit card ratings frequently is a good habit. Nearly all those people who are able to maintain a very high credit score or CIBIL score check their credit score frequently. This helps them to analyse their credit score and to put a cap when excessive of unnecessary expenditures are allowing the credit score to plummet.
4. Credit DiversityThe smart credit owners know the diversity in the calculation for a credit score. Thus it is not necessary to maintain a single window credit limit. Most of the good credit score holders have different credit sources. Thus you can either take a mortgage or any other kind of secured loan to diversify the credit limit.
5. Paying Bills in Full
Most of the banks allow the minimum payment facility. This is an excellent option for most of us when we are near the month end and tight with the pocket and cannot pay the full bill of the credit. Thus by paying the minimum amount of bill we are exempted from any late fee charges and penalties and the credit limit is continued for the next month.
6. Keeping Important Credit Accounts Open
The time duration of the credit history plays a pivotal role in the credit score. Thus the longer you have a credit account assigned to your name the chances of scoring better score increases.
7. Not Being Loan GuarantorsBeing loan guarantors will decrease your credit rating and add on to additional responsibility.
8. Minimizing Hard Enquiries
The hard enquiry is the most negative feedback on any credit score and a should be avoided at all cost as it completely destroys the credit rating.