How to Build a Good Credit History!

For a long time, India had a disorganized credit policy, which did not take into account a person’s credit history at any stage. However, in the last decade, the country has come a long way in its credit policies and many regulations have come to find a place in this arena now. Previously, whenever an individual needed credit, the lending team would look at their existing income documents to decide the loan amount. Today, the Reserve Bank of India (RBI), which is the regulatory authority for the banking industry in India, has mandated banks to carry out a mandatory credit check on every applicant before providing financial assistance of any kind. .

Know your own credit score

Knowing your credit score is crucial. Before you get any type of credit, you should review your own credit report and check your score. The most common agency used by banks is Credit Information Bureau India limited, better known as CIBIL. The CIBIL report shows the entire credit history of an individual. It reflects both the good and bad use of the individual’s credit, or in other words, the creditworthiness of the applicant.

The report indicates a score: the higher the score, the better the applicant’s chances of getting credit.

reading the report

The report will contain the last 5 mailing addresses of the individual maintained by the banks. It will also contain other details like Pan Card number (Indian Government issued personal account number), contact number, date of birth and a unique number called CIBIL control number. This control number is unique for each search that is performed.

The individual data is followed by the data of the credit issuer, the name of the bank, the outstanding amount and the payment history of the loan or credit. This field will also reflect the delinquency chain in case the customer has been accused of any criminal offenses in the past. Also the unpaid credit will be reflected as “pending”. There are a few terms that should catch your attention right away, one of them being the “write-off” status: this indicates that the bank wrote off the credit as bad debt. This is reflected negatively in the report, as it means that there is still a full threat to lend the person money, since they are not certain that they will pay it back.

Make corrections if necessary

The good news is that if you find a contrary entry, you can choose to make changes to your report, which could mean you make a payment for any visible defaults on your credit report. It’s actually best to fix these errors early on, since by showing up on your credit reports, your chances of getting future credit become virtually impossible.

There are different channels through which you can escalate the issue and bring it to the attention of a bank for confirmation. It is important to note that CIBIL (Credit Information Bureau India limited) will make changes to your report only if ratified by the bank concerned. If your bank is uncooperative on what you believe to be a genuine error, then you can contact your bank’s ombudsman for an effective solution. Remember that you must give your bank a 30 day time frame to go back to your initial complaint with them!

Building a good credit history in India is very important if you want to take advantage of the myriad of loan facilities that are available today or get additional benefits in issuing credit cards.