21-Feb-2017 written by : FSI-Team
From January 1st 2017, any Indian citizen who has accessed credit or is servicing any line of credit currently, is entitled to at least one free CIBIL score and CIBIL report in a year. This is as per diktat mandated by the Reserve Bank of India, the central banking authority. Access to at least one CIBIL score for free is great news for all existing users of credit and can turn out to be a gateway for further loans. Read on to find out more about how you could become more "loan ready" with access to a free CIBIL report at least once annually.
Credit is omnipresent today. There is hardly anyone around you who is not servicing a line of credit or two. This is largely because credit is easily available today. However, with asset quality being one of the major concerns of the banking industry, all lending institutions want to ensure that the kind of borrowers they choose are creditworthy enough.
This is also the reason why the central bank of India made it mandatory for all banks to go through the credit score and credit report of an individual to assess his ability to service credit. Thus, any loan application that you make will is likely to get through only if you have a CIBIL score of 750 and above.
Thus, it is important, not only to make a continuous effort at improving one's score, but also run a credit check from time to time to see that all the credit records are in order. Because of the high amount of data exchange between the banks and the credit bureaus, it is not uncommon for errors and discrepancies to creep into the credit report. If you do not keep a strict vigil over your CIBIL report and go through it at least once annually, these errors may bring down your CIBIL score, without you even being aware of it.
Thus far, CIBIL charged an amount of ₹ 500 to access the CIBIL report each time an individual made a request for a CIBIL score. This acted as a deterrent to the intention of credit users to access their credit report at least once a year to check whether or not their financial health was in order. However, with this impediment being removed, all credit users will now have access to one free credit report in a year.
As a result, they will be able to check their report for errors and raise timely CIBIL disputes in case a rectification is necessary. With this new mandate kicking in from January 1st, you can now enjoy access to a free credit report in a year. If you are a prospective borrower, this is great news for you as you can use this facility to your advantage.
As mentioned earlier, all banks request for an abridged version of credit report as a part of their credit assessment process, before they decide you are loan worthiness. If you wish to take a big loan such as a home loan or a vehicle loan this year, access your free CIBIL report at least six months prior to making the application. First up, check your CIBIL report closely for errors and discrepancies. In case of an error, a CIBIL dispute should be raised immediately. The resolution of the same may take anything between a week to a month, depending upon the nature of the dispute.
If your CIBIL report is free of errors, check if your CIBIL score is up to the mark. To be assured that any loan application will be accepted comfortably, you need to maintain a CIBIL score of at least 750 and above. If your score is not up to the mark, make a conscious effort to improve your CIBIL score in the interim between having accessed your free CIBIL report and applying for the loan you have been planning to for a while.
More often than not, the one thing that is found pulling down one's CIBIL score, is credit card outstanding. If you have a large outstanding on a single or more credit cards, make arrangements to repay your credit card debt at the earliest. Not only is it the costliest form of credit, rolling credit has a detrimental impact on your CIBIL score.
Consider liquidating some assets to repay your credit card debt or avail of debt consolidation loan that help you repay the outstanding amount at one go. By doing so, not only will you become debt free, it will count for good credit behaviour and will improve your score.
Once you have taken these corrective measures, wait for a month or two for your CIBIL score to come up to a satisfactory level. Accessing your free credit report at least six months prior to making a loan application will thus ensure that your CIBIL score is satisfactory and your credit report is blemish free by the time you make your loan application. A free CIBIL score will thus play a great role in making your loan ready and may well be your gateway to the loan you are seeking.