Understanding your Cibil Report
We are all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it’s the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender’s decisions.
While other factors do play a part in the lender’s decision, the Cibil Credit Information Report (CIR) plays a crucial role in a lender’s decision to approve a loan application.
Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender’s internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it’s like a professor (the lender) punishing an entire class (borrowers) for the mischief played by a few students (defaulters).
Today, Cibil CIRs provide lenders the ability to differentiate between those who have honoured their obligations responsibly and those who have defaulted.
Individuals who have appropriately managed their obligations build ‘reputation collateral’ with lenders. This allows those individuals to negotiate better terms with a lender.
What Is a Cibil CIR?:
A CIR is a month on-month record of an individual’s loan-related EMI (home loans, personal loan, automobile loans and so on), credit card or overdraft payments.
Described below is a detailed description of sections and information contained in a CIR.
This section provides the lender with your name, date of birth, gender, an identifying number (such as PAN , Voter ID or Passport Number) and contact details (telephone numbers and addresses). Up to four addresses are provided on the CIR. These details indicate who the information, on that CIR pertains to. This provides the lender with an overview of the CIR. It includes the total number of accounts and enquires (up to the past 24 months) on your CIR.
The most important section of your CIR, this section contains the details of your credit facilities. The account section contains the name of the lender’s, the type of credit facilities (home loan, Car loan, credit card, etc), the account number’s, whether single or jointly held, when each account was opened, date of the last payment, loan amount, current balance and most importantly, a month-on-month record of up to three years of your payments.
This section provides you with details regarding your loan applications such as, the name of the lender, date of the application, the type of loan and its size. The enquiries are captured for a period of seven years. Simply put, this section indicates how ‘credit hungry’ you.