Applying for a Bank Loan is the only option that people are left with when they face traumatic phases of finances in their lives. But, contrary to the common belief that a bank loan is easy to get, there are a few criteria that have to be fulfilled in order to be eligible for it. Often a person may be denied a credit card or any type of loan on different grounds. One reason for such refusal is bad credit history. When an individual’s name is listed in the bad credit list, getting it erased from there becomes crucial for the applicant in order to be eligible for any kind of loans in the future. In such cases, CIBIL report or credit ratings may play important roles in bringing back the applicant’s name into a favorable list.
What is CIBIL Report?
It is like a repository of information gathered from all banks located within the Indian Territory. It is a monthly record of an applicant’s or any individual’s details about loan related EMIs, credit card payments and any other official data related to a loan. These loans may cover home loans, personal loans, car loans or credit card transactions. Generally, the following information is included in a credit report:
- Any kind of personal information about an individual. E.g., Names, date of birth, PAN, Passport information, telephone numbers, voter’s ID details etc.
- Details of the previous loans taken, the loan amount, available balance in the account, overdue amount, number of days delayed in paying EMI etc.
- Information about any kind of inspection of enquiries made by the loan providing authority about the concerned individual
Role of Credit Scores
The loan market dynamics have changes off late. An applicant, hence, has to keep a check on the credit report generated by authentic agencies like CIBIL (Credit Information Bureau India Ltd.); which helps in getting a loan. This means a person should endeavour to keep a good credit score by maintaining a good loan returning history with banks. Whether an individual deserves a second or third loan or not, is determined by lending institutions by looking at such a credit report. And this decision is made by analyzing the credit score of a person. A credit score is a 3 digit representation of a person’s credit history. It is usually calculated by analyzing and observing an individual entire financial history, his borrowing details, loan repayment patterns and any instances of failure. It is ranged at a scale of 300 to 900 points. Higher the points, better is the impression generated by the applicant. That means, if an individual has a credit score of 800 or more, then he is in the good books and has more chances of getting a new loan approved.
Since the credit score is the first thing that a lending party notices in case of an applicant; it plays a crucial role in the loan generating process. It has been commonly observed that any person with a score higher than 700 has greater chances of getting a loan approved. It is not easy to forge a credit report; hence it is always good to maintain good practices for getting more benefits from lending institutions in the future. Bring in your finances into an order of discipline for avoiding any kinds of bad debt traps.
Practices that lead to a poor credit score
i) If any cheque has bounced from an individual’s account in the past. Multiple cheque bounce reduced the chances of getting any loans.
ii) Any irregular pattern or loan repayment in the past.
iii) Default or problematic repayment of credit card bills.
iv) Too many loans in the past.
v) Multiple loan applications for any unsecured loan.
Keep a Check on Your Loan Habits
It is important for handling finances with utmost care. Never try to take any illegal benefit of a loan that has been granted to you in good faith. A good practice should be to always make EMI and credit card payments on of before due time. If you are really in need of more loans, the tip is to rather than trying to get it in your name, get it in the name of any other family member, who is eligible.
Check Your CIBIL Score
What can be better than keeping a tab of your credit scores? You can know about your credit scores online by applying for a CIBIL score and by paying a small processing fee. Generally, when you fill an online application for the same, the report is sent to your email within 24 hours or less. Getting access to your scores will help you in maintaining your credits in a proper order.
