Most people are not aware about the CIBIL report and its score. Government of India has decided to reduce the number of fraudulent cases obtaining loans and defaulting them under suspicious circumstances. CIBIL is an agency of government which has tie-up with all the financial institutions and will monitor the financial behavior of every individual.
How Does CIBIL work?
All banks and lending institutions will require your PAN number as a mandatory thing when you do a financial transaction. Almost all your bank savings account, loan account, credit card account will be mapped with the PAN number. The financial statements will be recorded with this agency. The monthly payments made towards the loan account or the credit card account will be saved here against your name. Prompt financial payments will project you as a safe player in this market. Every transaction that you make as a responsible individual will help you to earn valuable credit score. A healthy credit score helps to project you as a reliable and responsible borrower to the financial institutions.
What Does Financial Institutions Do With CIBIL Score?
As said earlier, you will be slowly building up a good credit score over a period of time by making prompt payments. On the other hand, if you missed to pay a monthly payment, then it will be recorded and your credit score will be reduced. The feedback from the respective financial institution will be recorded and will reflect against your name for around 7 years.
Suppose if you apply for a personal or vehicle loan with any financial institution, the first task to be carried is that the institution will check for your credit score by taking the CIBIL report. In case, if you have defaulted or missed out genuine payments in the past, then you are at risk and probably might not get the loan approved.
It’s a Serious Business For Financial Institutions:
More number of financial institutions are coming under the ambit of CIBIL. Government is planning to include payment of electricity bills, telephone bills, and postpaid connection mobile bills in this CIBIL report. Hence, it becomes very important for the individuals to be financially disciplined. Gone were the days when individuals used credit cards till its tipping point and then had a default on it. This will inadvertently affect the CIBIL score and the individual will not be able to get any kind of financial help from these registered organizations.
So, What Do You Have To Do?
It is very important for the individuals to be responsible enough to get the loans and repay them on time. This will make sure you will not land in troubled waters. It will also help to build a good credit report and you can apply for any type of loans and get them approved without any problems.