CIBIL: A Common Citizen's View: Part I. Review on CIBIL - Credit Information Bureau India

I am trying to pen my observations, thoughts, experiences with CIBIL in FAQ mode for the benefit of the common citizen with the attendant aspects of issues, redressal mechanisms, the quality of information on CIBIL reports, ratings and their impact, banks and their attitude towards the consumer in a series.its an endeavor to help with the fellow consumers.

1. What's CIBIL?

Its a government and some of the private banks funded agency that aggregates the credit information about you, the retail consumer.

1. What does the Credit Information Report contain?

It will have all the types of credits that you have taken since 1993 or perhaps even earlier on. Credit means: loans/credit cards/personal loans/housing loans etc.,

1. Who provides the information about you to CIBIL?

Your own bank/loan agency.

1. Is it mandatory that every bank and loan agency provide the information?

No. But most of them do because its a single source of information about your credit worthiness: that is to what extent they can do business with you basing on credit history, credit ratings etc.,

1. How periodically would the banks/agency provide such information?

Every month or every quarter or so.

1. Would CIBIL consult you, the consumer before accepting the information about you or would banks consult you before sharing the information?

NO.

1. Why not?

As per the current government guidelines, banks/loan agencies do not require prior permission to share the information.

1. How do I know whether my credit related information is accurate?

Do access your Credit Information Report along with the Rating.

1. What is Credit Rating?

CIBIL: has started offering this consolidated rating that provides an indication of your credit worthiness.

1. What is the minimum Credit Rating that I need to have for elibibility for a loan by the banks?

750 on a scale of 900

1. Does it entitle me to get a loan from any agency?

No. But any conservative banker would expect you to have a healthy score as possible to provide the loans

1. How does my score get affected?

   
   




2. Number of loans

   
   




3. Type of loans

   
   




4. Timeliness of payments

   
   




5. Any adverse credit history( as reported by your current or earlier bank): in terms of written off or Default etc.,

   
   




6. What do these terms mean?

   
   

Written off means, bank has tried with you over a period of 3months in a row to recover the amounts that are legally due from you. But could not. Then it becomes a Non performing asset on their accounts( as I understand). Then its termed as written off.

1. Would banks still continue to reflect the written off amounts on your credit history?

Yes. Though its written off. Banks continue to show this amount to reflect the status of the credit transaction with you. It does include the number of years/months of since written off and actual amount written off; and the current amount outstanding.

1. How does it affect?

Any adverse comment by the banker, does affect very badly on your credit standing and credit rating: any future banker would not be inclined to provide any loan and automatically the application for any credit gets rejected; without your own knowledge.

1. How does it happen?

When you apply for any loan/credit card, the banker would ascertain your ratings and credit history from CIBIL( the only available largest database of information for them) and make a conservative decision.

1. What is the accuracy of the information on CIBIL?

Its a mixed bag. There are several instances of the erroneous information being crept into your reports.

1. How does it happen?

CIBIL only consolidates and provides the information as given by the bankers.

Unfortunately it doesnt enforce the banks to provide dispute free information or is of any use in helping the disputed information redressed.

Unless you take proactive interest about your own credit history you would not even know that some error has crept in and is affecting adversely your credit history and ratings.

1. How frequently do I need to get these reports?

If you have ongoing loans, better twice in a year or atleast once a year much as your normal physical health checkup

1. How do I remove the adverse comments on the Credit Report?

   
   




2. If the posted information is indeed about you and is accurate as per your records, then reach out immediately to the bank negotiate with them on the actual amount to be paid; ask them to provide your No Dues Certificate and also a written declaration that you do not have any liabilities and also they do inform CIBIL about this development within a certain time line.

   
   




3. What if were to "settle" the amount with bank?

   
   

Settlement means: both you and bank have agreed for a certain amount that is lesser than the amount that was reflected as per the bank records; bank is agreeable to settle this issue. But then, even if the bank reports as Settled, its an adverse comment on your credit history. If you are indeed settling an amount with the bank other than the disputed amount, then you must get in writing from the bank that they do:

• provide you No Dues Certificate

  
  




• provide written declaration that there is no further liability by you towards this loan account/credit card account

  
  




• informs CIBIL about the No Dues( NOT Settled status)

  
  




• informs CIBIL within a certain agreed timeline( not at their discretion)

  
  




• provides all the above information on the bank's letter head from the authorized representative or from a senior decision maker only in your interest.

  
  




• What if the bank doesnt agree to remove the adverse comment?

  
  

Bank will do so only if they have sold out your account to a third party or the account is still with them but they are not agreeable to the amount that you are willing to pay up.

Its a tough negotiation with the banks that would ensue.

1. What are the typical issues that would trigger such incidents?

   
   




2. You might have in a huff, did not pay up credit card dues due to some genuine issue such as late delivery of the card statement or an error on the card statement or online accounts refelct as if the credit card dues are deducted but not; or customer service executives did not respond in time by which time your card payment timeline is over.in any case banks treat the consumer with utmost disdain when it is related to the issue resolution. They presume that you are guilty and are extremely averse to review the facts, circumstances with empathy and address the customer's actual problem.

   
   

They are happy as long as you keep paying up the interest costs unquestioned under all the circumstances; the moment you rake up a fact then they are going to come out with the fine print on the loan agreement or credit card terms.

1. What if my account is sold out to another third party?

This is the worst part of it.

Banks do not even inform that your credit card account is sold out to third party

Now the third party will start informing about your late payments/defaults/ etc to CIBIL

These third parties make merry about such circumstances

Actually banks sold out( I do not see any reason or rhyme) written off accounts; which means they have accepted that is dud investments.

But once the account is sold out to a third party, then the third party would be trying to milk their way from you by threatening to report to CIBIL some adverse comment or unwillingness to remove the adverse comment unless the consumer pays up the staggering interest costs( not withstanding the actual facts and circumstances)

1. What would CIBIL do?

NOTHING: USELESS ORGANIZATION IN SUCH CIRCUMSTANCES

1. Would the bank atleast help provide the context of the disputed debt and other contextual information to the third party?

NO. They have washed off your account. They are least bothered.dear consumer.

1. Would the bank provide atleast the information that they have shared with the third party?

NO. NOBODY RESPONDS. NOBODY IS BOTHERED.

As per the regulations( as I understand), banks are expected to inform the consumer about such sell off of the accounts to the third party, provide the information that they have shared about you to any other agency etc., But in reality its all a hogwash

1. What is the recourse?

a) Either pay up a negotiated amount with the Third Party and ensure that they do provide no dues certificate, status as NIL to CIBIL

or

b) Ignore it at your own peril

1. Under what circumstances do I need to pay up?

If you are likely to make use of the loans in the future, its better to really get this stuff off from your Credit history.

In any case its better to be clean off of such transactions; specially if you are right, armed with facts.

1. Can I just ignore?

It depends.

Today, CIBIL is attempting, in its overdrive, at the expense of the consumer, trying to share this info to insurance agencies and tomorrow may be to the back ground verification agencies of employment. In such case it may affect your general routine.

1. What is the best way to redress such situation?

UNFORTUNATELY TODAY IN INDIA CONSUMER IS AT THE MERCY OF THE LARGE ORGANIZATIONs AND ORGANIZED NETWORK OF THE BANKS/THIRD PARTY AGENCIES IN THE WAKE OF AN EFFECTIVE REMEDIAL AND REDRESSAL MECHANISMS.

1. What can be explored?

   
   




2. Write to earlier bank

   
   




3. If not convinced write to the banking ombudsman

   
   

( with a fond hope that your issue would be sympathetically addressed)

• Start negotiating with the Third Party( which is best avoided in the first instance)

  
  




• File a civil suit against the bank( only if you are convinced with facts that you are not the erriing party and willing to slug it out within our judicial process)

  
  




• Alternately approach some agencies who can help you with the direction.

  
  




• What are those agencies?

  
  

a) Moneylife Foundation started by Sucheta Dalal

b) Disha: started by banks themselves

1. How can they help  my issue with the bank?

   
   




2. they will analyse your context; provide the "guidance" for the next steps in dealing with the banks

   
   




3. they "cannot" enforce any thing on the banks

   
   




4. they are effective only to the extent of identifying the omissions and commissions of the bank in the banker's language and also an effective way to address the issue with the banks

   
   




5. they will not be of any assistance in actually directing the bank to conclude the issue or pass any judgements on the banks or any such sort

   
   




6. Who are they to provide the support consumer?

   
   




7. Moneylife is promoted by Ms.Sucheta Dalal, a very passionate consumer activist

   
   




8. Disha is staffed with retired senior bankers who know the system

   
   




9. Is Disha effective?

   
   

Yes and No

1. Is Moneylife effective?

They are quite responsive; helps you reach out to Disha personnel

1. Would you issue get resolved?

God Knows

1. Whats the way out if your information is correct but error is represented on CIBIL report?

Pray to Almighty; Go thru the process as outlined above; Reason out, be patient, go thru all the channels of the bank as outlined as per the customer service process; banking ombudsman.

If your account is sold out to a third party then its a real mess.in dealing with the third party.

1. Any other alternative?

There are some self proclaimed benefectors of the consumer in enhancing the credit scores.

Its real bogus. Your credit score can only be enhanced by you and no one else.

These agencies are glorified recovery agents: who works with the banks thru their network or with the third party, negotiate the settlement amounts and ask you pay up the settlement fee.

They get their cut in the settlement amounts; but am not sure if they also ensure that ultimately they do play the intermediary in ensuring that the third party or the bank does provide the nil status and no dues.

1. What is the feedback on these agencies?

During my search and review on the google, I found it to be quite scary.

You end up paying them up for their service( ie negotiated settlement amounts with the third party or the bank) and not sure about the outcomes

1. Some of those agencies claim that they have tied up with CIBIL. How?

Absolute Bulls.t.

CIBIL cannot share( atleast as per the govt regulations) your information to any other agency other than the banks and that too only when there is a legitimate reason by the bank to access your credit information

1. How reliable is the data security at CIBIL?

God Knows

1. What would happen if the disputed entry is prevailing, while I am trying to resolve the issue with the bank/third party?

Your credit rating is being adversely affected.

UNFORTUNATELY CIBIL DOESNT HAVE ANY MECHANISM TO ENSURE ONLY DISPUTE FREE INFORMAITON IS REFLECTED OR WOULD IT RECOGNIZE THAT THE CONSUMER IS WORKING WITH THE BANK TO REDRESS THE ISSUE AND RATINGS CAN BE SUSPENDED TILL THEN OR SOME OTHER ALTERNATIVE

1. Any other agency?

ICPC: Indian Consumer Protection Center or so, in Mumbai does a great service

Do reach out to them to draft your legal letters free of cost; provide all the details by emails and follow their process. They would interface with bank initially and if needed does provide the legal assistance at very nominal rates. But then you need to attend to the legal proceedings on regular basis in Mumbai against the bankers.

1. What is the moral of the story?

Do pay up your outstanding dues.not withstanding the issue.negotiate then and there itself with the banks.do not understimate the amount of lopsided system in which you as an ordinary consumer is being affected for no fault of yours. Hence be alert.be proactive.be persistent with the banks and ensure that you have absolutely error free information on your credit reports and also ensure that the report is fully cleared off of the negative comments.

1. What can be done?

Perhaps the consumers can petition RBI to provide consumer protection against the ratings from such disputed information.