Identity theft occurs when someone uses your personal information to apply for a loan or credit card. If this application is successful, the individual has access to finance that you are liable for. The individual who has stolen your identity will probably not pay back the misappropriated funds. Hence, the lender will update your credit information report (CIR) to say that you have defaulted on a loan.
What does it mean when I see "enquiries" on my CIR, when I haven't applied for a loan?
Enquiries are usually made on your credit history when you apply to a lender for a loan. The lender accesses your CIR to assess your repayment capability.When you see enquiries that you have not made, it means one of 2 things:
1. The lender is making an enquiry to review your overall financial health.
2. Someone with access to your personal information may have approached a lender in order to apply for a loan. This is worrisome because the lender could believe that the applicant is genuine and may proceed to sanction the loan.
In the event that a loan is sanctioned by a lender, the account will appear on your CIR within 45 days.
What should I do when I see "enquiries" that I haven't made?
The first thing you should do when you see enquiries that you have not made is to check your CIR for loan accounts that do not belong to you. If you do find discrepancies, immediately raise a 'dispute request' by visiting the 'dispute resolution' page on the credit bureau's website. If you are informed by the bureau that the lender has rejected your dispute request, you should report the erroneous account to the relevant lender immediately so that the lender is alerted to the identity theft case.How can I protect myself from identity theft?
The easiest way to prevent identity theft is to regularly monitor your credit history. Purchase your CIR 3-4 times a year and ensure that your credit history accurately reflects your credit usage and activity. If you see enquiries (loan applications) that you have not made, immediately alert the credit bureau via dispute resolution and the relevant lender that you have not applied for a loan.In addition, it is imperative that you keep your personal information, identity proofs and address proofs are stored in a secure environment. If you are discarding documents ensure that the documents are shredded to prevent misuse.
Don’t seek a loan unless you really need it
My friend Arun who is a top official at a large brokerage firm was incensed with his prospective home loan lender. He had approached them on the advice of his colleague to whom the lender had given an excellent rate. While the lender was more than happy to give him the loan, they were offering him a slightly higher rate.When he enquired about the reason, he was informally told that his credit score was lower than his colleague and hence the higher rate.
He asked for and got a copy of his credit report from the prospective lender and confirmed that the credit report was in order and had correctly showed that he had paid all his dues on time. He had also requested his colleague to get the credit report from the same lender.
When Arun compared the two reports he was amazed that his credit score was lower than his colleague’s score.Hence, he called me to throw some light on the matter.
I asked him to take his colleague’s permission and send the two credit reports to me. The look at two reports was quite illuminating.
Both had excellent repayment records and good credit scores though his colleague’s score was little higher than Arun’s. The only visible difference was that Arun had about four credit cards (all showed an impeccable repayment record on the credit report) against only two credit cards for his colleague. However, a closer look revealed that there had been four enquiries for his credit report for a personal loan of `300,000 just four months back, though no personal loan showed up on his report.
When I checked with Arun, I was told that he was considering taking a personal loan for a foreign holiday but had ultimately dropped the idea. He had applied to four banks but ultimately did not take the personal loan though it was sanctioned. The banks, once they received the request from him for a personal loan, had sent a request to Cibil for his credit report.
The credit report also contains information about how many times Cibil got a request for the credit score of a particular person and for what products and amounts.
Now it is not known how Cibil exactly determines your credit score but a number of these requests within a very short span of time, especially for unsecured credit (indicating hunger for credit), can have a negative impact on the credit score.
So, at least for now I asked Arun to live with it (after all his credit score was not bad). But for the future I told him to be careful while shopping for credit. First make up your mind if you need credit or not before applying for it. Sometimes the sheer fact that you applied for credit (that you did not ultimately need) may result in a small reduction in your credit score even though you did not end up taking the loan.
The best way to go for credit product shopping is that before applying for any loan or a credit card first get your credit report from Cibil directly (you will not get the credit score on this report which is given only to banks). You can do so by downloading the application form from the Cibil website. Along with this form one needs to send a copy of PAN card and address proof. All these documents and a payment of `142 through demand draft or online has to be made to Cibil. On receipt of all this, Cibil will send across your credit report to you. Once you get the report, you should check the accuracy especially for any loan or credit card that is never held by you.
These kinds of errors are to be reported immediately to Cibil and the concerned banks. The banks should be asked to get the records amended in Cibil records. If they do not respond to your request within a month, you should file a complaint with the banking ombudsman. A mistake in your credit record can prove very expensive, hence pursue these steps seriously.
You should apply for a loan or credit card only and only if you see no error in your Cibil report.
Once you get your credit report and it is error-free, you should go ahead shopping for credit card or a loan product.
But before applying for many of them to know more about the scheme aligned with them, you should always do some smart shopping online.
There are many price comparison websites like Apnapaisa that allow you to compare details about various credit products across various parameters.
You can compare various credit products and then apply only for the product that suits your requirement the best. This will ensure that only one bank makes an enquiry for you credit record, hence your high credit score can be safeguarded.
He asked for and got a copy of his credit report from the prospective lender and confirmed that the credit report was in order and had correctly showed that he had paid all his dues on time. He had also requested his colleague to get the credit report from the same lender.
When Arun compared the two reports he was amazed that his credit score was lower than his colleague’s score.Hence, he called me to throw some light on the matter.
I asked him to take his colleague’s permission and send the two credit reports to me. The look at two reports was quite illuminating.
Both had excellent repayment records and good credit scores though his colleague’s score was little higher than Arun’s. The only visible difference was that Arun had about four credit cards (all showed an impeccable repayment record on the credit report) against only two credit cards for his colleague. However, a closer look revealed that there had been four enquiries for his credit report for a personal loan of `300,000 just four months back, though no personal loan showed up on his report.
When I checked with Arun, I was told that he was considering taking a personal loan for a foreign holiday but had ultimately dropped the idea. He had applied to four banks but ultimately did not take the personal loan though it was sanctioned. The banks, once they received the request from him for a personal loan, had sent a request to Cibil for his credit report.
The credit report also contains information about how many times Cibil got a request for the credit score of a particular person and for what products and amounts.
Now it is not known how Cibil exactly determines your credit score but a number of these requests within a very short span of time, especially for unsecured credit (indicating hunger for credit), can have a negative impact on the credit score.
So, at least for now I asked Arun to live with it (after all his credit score was not bad). But for the future I told him to be careful while shopping for credit. First make up your mind if you need credit or not before applying for it. Sometimes the sheer fact that you applied for credit (that you did not ultimately need) may result in a small reduction in your credit score even though you did not end up taking the loan.
The best way to go for credit product shopping is that before applying for any loan or a credit card first get your credit report from Cibil directly (you will not get the credit score on this report which is given only to banks). You can do so by downloading the application form from the Cibil website. Along with this form one needs to send a copy of PAN card and address proof. All these documents and a payment of `142 through demand draft or online has to be made to Cibil. On receipt of all this, Cibil will send across your credit report to you. Once you get the report, you should check the accuracy especially for any loan or credit card that is never held by you.
These kinds of errors are to be reported immediately to Cibil and the concerned banks. The banks should be asked to get the records amended in Cibil records. If they do not respond to your request within a month, you should file a complaint with the banking ombudsman. A mistake in your credit record can prove very expensive, hence pursue these steps seriously.
You should apply for a loan or credit card only and only if you see no error in your Cibil report.
Once you get your credit report and it is error-free, you should go ahead shopping for credit card or a loan product.
But before applying for many of them to know more about the scheme aligned with them, you should always do some smart shopping online.
There are many price comparison websites like Apnapaisa that allow you to compare details about various credit products across various parameters.
You can compare various credit products and then apply only for the product that suits your requirement the best. This will ensure that only one bank makes an enquiry for you credit record, hence your high credit score can be safeguarded.
Having too many loans may hurt your chances of getting a new loan
It is important to understand the account section of your credit information report (CIR). After all, lenders focus on this section of your CIR before making the lending decision.
What types of accounts get reported on my CIR?
Only credit facilities get reported on your CIR. Like home, auto and personal loans, overdraft facilities, credit cards, loan against shares, to list a few. However, it’s important to note that none of your assets get reported on your CIR. Assets include savings account, fixed deposits, mutual funds and stock investments.
Closed loan accounts and what they mean to my CIR?
If you find a date adjacent to the ‘closed’ field in your account section, this means that that loan account has been closed by the lender. It means you have paid off your loan.However, if you have not been able to pay off your dues in full, your account could still be marked ‘closed’. In such cases, you may see the ‘status’ section populated (written-off or settled), which is viewed negatively by lenders. If no date is filled in the ‘closed’ field, it implies that your account is still open. This can be harmful to your application, if you have taken many loans over the years. Now, why is this harmful? Well, if many loan accounts are perceived to be open, the lender is likely to think that you already have large monthly outflows in terms of EMIs. This can negatively impact your loan application. Hence, if you see open accounts on your CIR that are actually closed, raise a dispute resolution request with the credit bureau. This can be done easily on the credit bureau’s website.
What are the different types of ownership indicators that can appear on my CIR?
The ownership indicator tells the lender who is responsible for payments on that credit facility. There are several types of indicators that can appear on your CIR:
Single: You are solely responsible for making payments on the account.
Joint: You and someone else bear joint responsibility for payments on these accounts. It is important to check your CIR periodically, because late dues on a joint account are likely to affect your loan application, even if you are not the one paying off the loan.
Authorised user: This is used for add-on credit cards. It implies you have an access to credit, but are not responsible for paying dues on that particular account.
Guarantor: A guarantor pledges to repay a loan on behalf of a third party who has taken a loan. Hence, he provides a guarantee to the lender that he will honour the obligation in case the principal applicant is unable to do so.
You have to clear total dues to your bank for a clean Cibil report
How can I apply for a loan of Rs10 lakh? What is the minimum requirement for that? — Bibhuti Choudhary
You have not clarified what you need the Rs10 lakh loan for. Although the basic documents are common for most loans, a few others may also be necessary. The basic documents, common to most loans, are as under:
I assume that instead of paying the full amount as demanded by banks you have asked the banks to settle the dues at a lesser amount. In such cases, your credit report will show the status as “settled” and will also indicate that the bank concerned had to ‘write off’ some amount. A credit report of this nature is not viewed positively by the bankers. If at all you are interested in getting your report clean, you will have to approach your previous banker and settle their total dues.
You have not clarified what you need the Rs10 lakh loan for. Although the basic documents are common for most loans, a few others may also be necessary. The basic documents, common to most loans, are as under:
- Completed loan application form
- 3 passport size photographs
- Proof of identify (photocopies of voters ID card/ passport/ driving licence/ IT/ PAN card)
- Proof of residence (photo copies of recent telephone bills/ electricity bill/property tax receipt/ Passport/ voters ID card)
- Statement of bank account/ pass book for last six months
- Personal assets and liabilities statement (this is inbuilt in loan application form)
- Original salary certificate from employer
- TDS certificate, Form 16 or copy of IT returns for last 2-3 financial years, duly acknowledged by IT department had taken two personal loans from ICICI Bank in 2005 and 2007, respectively and was also using a credit card from SBI Card. But due to financial problems, I was unable to repay the EMIs as well as card outstanding. As the problems eased, I cleared the loans and credit card dues and have also obtained the closing statement (no dues) from both institutions.
I assume that instead of paying the full amount as demanded by banks you have asked the banks to settle the dues at a lesser amount. In such cases, your credit report will show the status as “settled” and will also indicate that the bank concerned had to ‘write off’ some amount. A credit report of this nature is not viewed positively by the bankers. If at all you are interested in getting your report clean, you will have to approach your previous banker and settle their total dues.
Always pay on time to maintain your DPD reading at 000/STD
Applying for a loan can be quite tedious, given the filling up of forms and other documentation, not to forget the time spent awaiting a decision. Besides, the world of finance and banking adds to the confusion by using acronyms, which are difficult for the layman to understand.
Today, we will decode the term Days Past Due, commonly referred to as DPD in banking parlance. DPD is critical to your loan, because if this attribute of your credit information report (CIR) is perceived negatively by a lender, your loan application may be rejected.
What does DPD mean? What are the ways DPD can be reported?
DPD appears in the account(s) section of your CIR. Here, it resides with one other piece of information — the month and year of payment. The DPD indicates how many days a payment on that account is late that month. Anything other than “000” is considered negative by a lender.
Up to 36 months of this payment history (with the most recent month displayed first) are provided in this section. For example, if you have taken a loan whose payments started in August 2010 and are three months late on a payment due at the end of September 2010, your DPD may be reflected as follows:
DPD9060300000
Month/12-1011-1010-1009-1008-10
Year
Given that your credit history helps a lender ascertain your ability to pay additional debt based on your past performance, having DPD other than “000” on your CIR would imply that you have not met your financial obligations in the past. Hence, lenders may view accounts that are reported with DPD as anything other than “000” negatively and this may affect your chances of a loan approval.
It is important to note that some lenders report DPD as per the asset classification norms defined by the RBI, which are as follows:
STD (Standard):Payments are being made within 90 days. Any account overdue by more than 90 days is classified a non-performing asset (NPA) by lenders
SUB (Sub-standard): An account which has remained an NPA for up to 12 months
DBT (Doubtful):The account has remained sub-standard for a period of 12 months
LSS (Loss): An account where loss has been identified and remains uncollectible
Any classification other than “STD” is viewed negatively by lenders during the loan application process.
On occasion, you may see ‘XXX’ reported for your DPD on a certain account. This means the lender has not reported that month’s DPD to CIBIL and hence, there’s no need to worry.
The best way to avoid having anything other than DPD of “000” or “STD” on your CIR is to always pay on time, and the best way to always pay on time is to avoid taking more debt than you can comfortably handle with your current income.
Today, we will decode the term Days Past Due, commonly referred to as DPD in banking parlance. DPD is critical to your loan, because if this attribute of your credit information report (CIR) is perceived negatively by a lender, your loan application may be rejected.
What does DPD mean? What are the ways DPD can be reported?
DPD appears in the account(s) section of your CIR. Here, it resides with one other piece of information — the month and year of payment. The DPD indicates how many days a payment on that account is late that month. Anything other than “000” is considered negative by a lender.
Up to 36 months of this payment history (with the most recent month displayed first) are provided in this section. For example, if you have taken a loan whose payments started in August 2010 and are three months late on a payment due at the end of September 2010, your DPD may be reflected as follows:
DPD9060300000
Month/12-1011-1010-1009-1008-10
Year
Given that your credit history helps a lender ascertain your ability to pay additional debt based on your past performance, having DPD other than “000” on your CIR would imply that you have not met your financial obligations in the past. Hence, lenders may view accounts that are reported with DPD as anything other than “000” negatively and this may affect your chances of a loan approval.
It is important to note that some lenders report DPD as per the asset classification norms defined by the RBI, which are as follows:
STD (Standard):Payments are being made within 90 days. Any account overdue by more than 90 days is classified a non-performing asset (NPA) by lenders
SUB (Sub-standard): An account which has remained an NPA for up to 12 months
DBT (Doubtful):The account has remained sub-standard for a period of 12 months
LSS (Loss): An account where loss has been identified and remains uncollectible
Any classification other than “STD” is viewed negatively by lenders during the loan application process.
On occasion, you may see ‘XXX’ reported for your DPD on a certain account. This means the lender has not reported that month’s DPD to CIBIL and hence, there’s no need to worry.
The best way to avoid having anything other than DPD of “000” or “STD” on your CIR is to always pay on time, and the best way to always pay on time is to avoid taking more debt than you can comfortably handle with your current income.
I am 65 years old and own a flat in a cooperative housing society. Which institutions give reverse mortgage loans? —D Raju
Reverse mortgage loans are to be extended by primary lending institutions, viz. scheduled banks and housing finance companies registered with the National Housing Bank (NHB), or any other class of institutions as may be notified by Government of India. The major reverse mortgage lenders in the country include the NHB, Dewan Housing Finance and a majority of public sector and private sector banks.
I got into a debt trap due to the recession. The company I was working for had to shut down, rendering me jobless for almost 18 months. To add to it, I got married in 2006 due to which there was an excessive use of credit cards for shopping and I had also taken a personal loan. I was paying my EMIs regularly until I was rendered jobless. Then I took another personal loan to pay off my previous loan but as I was jobless and had no source of income, I could not honour the EMI commitments. So I took yet another loan and repeated the same mistake. By this time, I was in a huge debt trap. So I sold my car, borrowed money from friends and relatives and started settling my loans. I had loan and credit card from almost every bank. Thankfully, now I am debt-free and have no loan outstanding. But my name is in the negative Cibil list, because of which almost all the banks have rejected my loan application for a car. I had called up Cibil and explained my situation and requested they take my name off the list. They told me to get the “control number” which none of the banks is willing to share. What do I do? —Rahul Dubey
Having defaulted and later on settled the dues of a bank means that although you are no more a defaulter, yet your credit history will continue to show that you had settled your dues and also that the bank concerned had to write off a part of its dues. This being the case, first and foremost, you need to know which banks have reported and what is the current status. You can get your credit report from Cibil directly by sending a demand draft for `142 in favour of Cibil along with the application form, which can be downloaded from the Cibil website. After getting the details, you need to approach the bank concerned for paying the dues and getting your name cleared/ correcting the records with Cibil.
Reverse mortgage loans are to be extended by primary lending institutions, viz. scheduled banks and housing finance companies registered with the National Housing Bank (NHB), or any other class of institutions as may be notified by Government of India. The major reverse mortgage lenders in the country include the NHB, Dewan Housing Finance and a majority of public sector and private sector banks.
I got into a debt trap due to the recession. The company I was working for had to shut down, rendering me jobless for almost 18 months. To add to it, I got married in 2006 due to which there was an excessive use of credit cards for shopping and I had also taken a personal loan. I was paying my EMIs regularly until I was rendered jobless. Then I took another personal loan to pay off my previous loan but as I was jobless and had no source of income, I could not honour the EMI commitments. So I took yet another loan and repeated the same mistake. By this time, I was in a huge debt trap. So I sold my car, borrowed money from friends and relatives and started settling my loans. I had loan and credit card from almost every bank. Thankfully, now I am debt-free and have no loan outstanding. But my name is in the negative Cibil list, because of which almost all the banks have rejected my loan application for a car. I had called up Cibil and explained my situation and requested they take my name off the list. They told me to get the “control number” which none of the banks is willing to share. What do I do? —Rahul Dubey
Having defaulted and later on settled the dues of a bank means that although you are no more a defaulter, yet your credit history will continue to show that you had settled your dues and also that the bank concerned had to write off a part of its dues. This being the case, first and foremost, you need to know which banks have reported and what is the current status. You can get your credit report from Cibil directly by sending a demand draft for `142 in favour of Cibil along with the application form, which can be downloaded from the Cibil website. After getting the details, you need to approach the bank concerned for paying the dues and getting your name cleared/ correcting the records with Cibil.
Very nice stuff.......... thanks for sharing a good blog post on cibil credit report great work kindly keep it up.
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