A credit rating report is a summary of an individual’s past borrowing and repayment track record(s). In India, these have been popular post 2010, although many bureaus started operations post 2005 itself. Of late credit reports have enriched information such as KYC particulars, address history and declared income levels. Using the same data to derive a score is another very recent development. The country’s largest bureau has also commenced (http://www.cibil.com) selling individual’s credit reports to the subject directly. A wealth of information can be found in the other bureaus also – http://www.equifax.co.in, http://www.experian.in and http://www.crifhighmark.com
The safest way to maintain a good standing is to meet all lender-obligations in a timely manner. (To achieve the same, the individual must maintain his/her credit obligations – both short and long term, meaning all credit card minimum dues and longer tenure loans as for example, purchase of a car or home). Naturally, good behavior builds viz., an individual who has had a string of positive loan track records is likely to be sanctioned a higher amount during the next request.
The opposite is equally true!!
Patchy repayment records bring down the rating report and also pull down the individual’s credit score. Sure, this can happen – after all, life is a combination of both downs and ups. There are times when one needs to keep basic ends met – leave alone repayment of contracted obligations. Hence delays and defaults could happen despite the best of intentions. Some tips to tackle the same:-
- Keep the lender informed about the scenario and seek temporary relief in terms of a holiday period with lower contracted interest rate
- Do not drop the repayment to zero – can a small (e.g., minimum due) be met so that lender is comforted that person’s intention and effort are behind the repayment
- Go for credit counselling in case there are many transactions
- Bank of India’s http://abhaycreditcounselling.com
- ICICI’s http://www.dishasfc.org are two examples
- Rebuild your credit history (resurrection!) after settling with the lenders
- Recently companies such as Credit Vidya, Credir Sudhaar and Credit Mantri have established frame works to accelerate the process
The Author, Kalyanaraman M, is the Consultant – New Products with TVS Credit Services