22-Jul-2017 written by : FSI-Team
Are you one of the fortunate few who has an excellent CIBIL score? Do you wish to use your score to help your friends and relatives who are saddled with bad credit? Has it ever come to your mind to make some quick profit by letting someone else enjoy the benefits of your good CIBIL score? Before such thoughts tempt you to sell your score, let's find out whether it is really possible to do so. Is it legitimate to let someone else use your score?
Well, as per the credit reporting agencies there is no way one person can allow someone else to use his credit score. Anyone attempting to do so is violating the laws and opening doors to host of problems. Anyone using other's credit score to get loan approvals may be charged with identity theft. Such fraudulent representation can lead to criminal proceedings and even imprisonment.
The CIBIL score and report are unique to each individual based on the repayment patterns and other financial behaviour. The opportunity to leverage someone else's high CIBIL score to secure loans is a distant dream. In fact one should never accept any such deals. If you allow someone else to use your score and name, you would be essentially lying on the applications and that would be illegal. Moreover it is you who will be considered responsible for the loan payments and not them. Any missed payments will ruin your credit history and score. If the person has no intention to repay the loan, your account will go into collection and you will repent getting involved in such frauds later.
So does that mean you can do nothing to help your friend whose name is on the loan defaulter's list? Are there no legal ways in which your good CIBIL score can help your dear one secure a loan in times of need? Well, Co-signing a loan can be a solution. Here you do not sell your score to someone else. Rather you take up the joint responsibility of the loan in a lawful manner. If a person's score is not good enough to secure an approval, having a co-signer with a good credit score can make him eligible for the loan, and at the same time make you equally liable for the loan payments. Remember, when you become a co-signer you are risking your financial future. If the person you are helping is late on payments it will be recorded on your report and it will impact your score. Since co-signed loans are considered same as other debts, your debt to income ratio will rise, thereby affecting your ability to get approved for future loans. There is no real tangible benefit for you. So co-sign only if you are sure that the person you are helping will use the credit responsibly.
A few years ago people used to let others make use of their good CIBIL score by making them an authorized user on their credit card. If a person's name was in the loan defaulter list, he would not get approved for a credit card. But by getting himself added as an authorized user he could not only use credit to make purchases but also improve his score. The positive credit history of the primary card holder account hit the authorized user's account and helped him improve his score. Hence by piggybacking on someone else's credit score an authorized user could raise his credit score and obtain loan under false pretence. This practice distorted the credit scores and the lenders felt cheated. To keep a check on such wrongly inflated credit scores the credit scoring algorithms have now become more precise and stringent.
Instead of using such temporary ways to improve your CIBIL score by using someone else's good credit it is better to focus on your own credit profile and take measures to improve it. Take cues from people with an excellent credit score as to how they are able to achieve it. Make on time payments and inculcate good spending habits and work towards improving your score.