How to improve your CIBIL Score?

CIBIL credit report plays an important part in the approval or rejection of home loan applications. A low CIBIL score or written off/settled transactions could lead to reduced chances of obtaining home loans.

Credit Repair Services

Credit repair services are often considered as an option when attempting to fix credit report. However, every loan applicant should know these few facts before proceeding further.

A credit repair service cannot remove or change any information mentioned in the CIBIL credit report.
If an applicant allows a credit repair company to apply for and access his/her Credit Information Report (CIR), a copy of the report will be sent to the applicant’s email address or home address. However, generally, it is not advisable to let third-party agencies access CIR.

An applicant can apply for CIBIL online dispute resolution and get their CIRs fixed at no cost.
CIBIL cannot make any changes to the CIR directly. The bank or financial institution which has written off the loan needs to authorize CIBIL to make changes.

Major problems with Credit Information Report (CIR)

• Inaccurate information is shown in CIR
• Defaults in payments made due to the following reasons:
• Genuine financial problems
• payment on credit cards due to relocation
• payment due to failure to receive statement
• with lenders on annual fees or charges
• with lender due to fraud

However, before taking an action, a loan applicant should inspect his/her credit Information Report. The following three steps need to be followed to check the CIR

• Subvention Scheme or 20-80 scheme
• Pre-payment of Home Loan
• CIBIL Score and its effect on your home loans
• Buy your credit score
• Check the CIR
• Take an action

Buy the credit score: Buy the CIBIL report. The cost of the report is Rs. 470/- and once an applicant applies for the credit report, he/she will obtain the credit report within 3 business days.

Check Credit report: Understand your CIR: The applicant should check the number of open accounts in the report. There could be two possible situations, in this case, :

1) The account is not reported “closed” by the financial institution

2) The applicant might have accounts open in his/her name that does not belong to him/her.

The applicant can solve this problem by following CIBIL’s Dispute Resolution Process. A wrongly stated open account could overstate the applicant’s credit exposure.

Check the status of the accounts: A written off or settled account could cast a negative shadow on a person’s credit report. Check whether any account has been tagged wrongly. If yes, then a dispute resolution process might have to be applied.

Payment History of every account: Check the due section carefully. If any of the accounts show something apart from ‘000’ or ‘XXX’, then it could be viewed negatively by financial institutions. If you have missed some payments, then ensure that you pay your bills/EMIs. Once this is done, your CIBIL score will start improving. However, you would need to wait for 6 to 8 months for the score to improve if everything else remains constant.

Take action: In order to fix his/her credit report, the applicant would need to take appropriate action. Let us consider the various scenarios that might need to be fixed.

1. Inaccurate information is shown in CIR

Once the applicant confirms the inaccurate information, he/she can start the Dispute Resolution Process.

You should be able to obtain the final result from CIBIL in 30 days. If the bank or financial institution confirms the information already reflected in CIR, then CIBIL will not be able to make any changes or updates to the Credit Report. Applicants are advised to contact the bank in order to resolve the issue.

2. Defaults in payments made due to the following reasons:

a. Genuine financial problems

If the applicant has missed payments earlier because of loss of a job or other issues, then it is advisable that he/she repay the amount to the bank when his/her economic situation gets better. This would ensure that the applicant could obtain loans much more easily.

b. Missed payment on credit cards due to relocation

If the applicant is relocating, then it might be a good idea to transfer all the open accounts or close accounts if required. They also need to manage open bank accounts or credit cards. If EMI payments are being made, then ensure that any savings account linked with such EMIs remain well funded or that the EMI transactions are connected to another account.

However, often while relocating people tend to forget to inform the financial institutions about the change in address. This might result in missed payments, late payments, etc. which could often total up to a large amount. In such cases, the best thing to do would be to pay the full amount to the financial institutions.

c. Missed payment due to failure to receive statement

Even though this situation can occur, most banks clearly state that the cardholder is responsible for payment of outstanding amount irrespective of receipt of the statement. Non-payment of credit card amount due to non-receipt of statement cannot be considered as a valid reason for missing payments. If you have not paid the statement due to this reason, the service charges, fine, etc. will accumulate. If the issue is resolved soon, then the effect on credit history will be minimal. It is advisable to get in touch with the bank and fix the situation.

d. Disputes with lenders on annual fees or charges

Check the terms and conditions before taking any loan or credit card. The credit card holder should be clear about the transfer charges, maintenance charges, issuance charges, etc.

e. Dispute with lender due to fraud

In a case of any fraudulent transactions, the bank will investigate the issue and be depending on the results, a charge back may be issued or not. Such disputes need to be resolved between the applicant and the bank.

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