Use Your CIBIL Report- Get Easy Loan

Your CIBIL report is categorized under 6 headings:

Report Header Information
Consumer/Borrower Information
Address(es)
Summary
Accounts
Enquiries

Out of these, summary, accounts and enquires are the important ones to consider. Here we discuss the important elements of these three categories, and depict which element could have what kind of effect on your eligibility and what precautions to take for avoiding a bad credit report. Also if you have a bad credit report, we try to find out ways and means through which you can negotiate for a lesser interest rate or a longer tenure.

SUMMARY

The heading ‘summary’ contains the following material information:

• ACCOUNTS:
  • OVERDUE:Overdue means the total amount which had to be paid before the date of generation of this report but has not been paid. That is, it shows the total amount in the late payment category. You should try and clear this amount before applying for any new loans or credit cards since this would show in the report and is considered as negative. If you cannot do this, try and keep a roadmap ready as regards to how you will be clearing this amount. If your history is not bad enough but you are presently running in overdue, the banks may consider giving you a loan, on basis of your strong history and a concrete future expectation. For example, if you have a fixed deposit that is going to mature, you can say that you will be able to clear your overdue with that amount.
  • ZERO-BALANCE:This is the number of paid-off accounts, i.e. the number of accounts that have been cleared. If this number is large as compared to your total accounts, it is a positive point for you. If you have an overdue but a large number of zero-balance accounts, you can make a point to your future credit lenders that most of your accounts have been paid off and cleared. By doing so your credibility increases and you can negotiate for a lesser interest rate.
  • ADVANCES: For credit cards, this is the highest amount of credit used (highest billing) in the history of the account. For other account types it is the sanctioned amount of the loan. This shows your history as regards to what the highest amount of loan/credit limit was that you took from a bank. This is studied by the banks to find out the your spending habits and your credit bearing history. In case you do not disclose the history of your loans to the bank, it is here that they start finding out the real you. This would have a negative effect on you as far as your credibility is concerned. So it is a good idea to disclose only the loan which was highest in your past. If your credit card advance is too high and overdue is low, you can make a point that you should be issued a credit card since you use it often, for high amounts and re-pay regularly.

• BALANCES:
  • CURRENT:The current credit and loan outstanding together with the interest that is levied. In total, this shows to the bank that you are currently under this amount of debt burden. This amount is then tallied with your income to find out how much your debt is as compared to your income and whether you are eligible for any more amount of loan or not. Here is where your re-payment capability is calculated. The banks ask for your EMI statement and find out how much more EMIs can you afford. This is how your total eligibility is checked.
  • OVERDUE: This is the total overdue in all accounts. This shows the total amount which has not been paid within the stipulated timeframe and that you are late for payments. These conditions are looked at negatively by the bank. In the best case, you should have no amount as overdue. To counter if you have an overdue, you should be able to give reasons for your overdue and the measures you have already taken to counter these overdues.
  • ENQUIRIES: These entries display the number of times different banks have made enquiries for your CIBIL record. This information is used by the banks to find out where all you applied for any kind of credit. If this number is much more than your existing loans, it depicts that you applied but the bank or the financial institution rejected your loan application. The banks could gather information from formal or informal sources as regards to why the application was rejected. This is considerably necessary an information for the bank to ‘bank upon’. You can keep your armour ready for reasons why the position was negative then, how you have overcome those negatives of yours and how you consider yourself worthy enough for a loan now, as compared to then. For example: If your salary has increased since then and you have taken no additional loans, you are in a position to showcase this positive point.

ACCOUNTS

This is the most important part of your CIBIL report which directs your future as regards to whether you will get loan or not.

• STATUS:

Your status can be any one of the following:

• 0
• Suit filed,
• Wilful default,
• Suit filed(Wilful default),
• Written off,
• Suit-filed and written-off,
• Wilful default and written-off,
• Suit filed(willful default) and written off,
• Suit filed(willful default) and written-off,

0 means that your account is settled and closed. Rest all are negative status. In case your report has such entries, it is recommended that you approach the bank from which you took loans and settle the account. These types of entries can have a long term effect on your credit history. For example written –off status for credit cards stay in your report for 7 years and can be reviewed thrice i.e. 21 years. So it is good to solve these issues. In case of written off, you can directly approach the bank and discuss a closure. Moreover if such entries have been made by mistake, you should immediately contact the bank which has reported such status for you, resolve the matter,take a no dues certificate from the bank and ask them to report the correct status to CIBIL.

• DAYS PAST DUE:Days past due or DPD means that you missed out paying you EMI on the scheduled day and that your payment was late by the number of days mentioned for that particular month. Anything other than “000” is taken as negative. It is important that you start reducing your DPD gradually by 10 -15 days for a length of 3 to 4 months before making a loan application. That is how you can make a point that you have started improving the DPD and the bank considers your case on the basis that you are interested in improving your credit history and are actually working on it.
  Some lenders report DPD as per the asset classification norms defined by the RBI, which are as follows:STD (Standard), SUB (Sub-standard), DBT (Doubtful) and LSS (Loss). Any classification other than “STD” is viewed negatively by lenders during the loan application process. ‘XXX’ reported for your DPD on a certain account means the lender has not reported that month’s DPD to CIBIL .

ENQUIRIES

This section contains the name of the banks which enquired/ asked for your CIBIL report in the past, the date on which the enquiry was made, the purpose for which the enquiry was made and the amount for which you have made the enquiry. It’s a good idea to spread out your loan and/or credit card applications so that you do not to seem credit hungry and it does not give an impression that you are constantly looking for people who can give you money to spend.

Go ahead. Use the power of your credit report to negotiate and improve your chances of getting a loan at easier terms.

All the best..!!!