NEWS & ADVICE : CREDIT CARDS
CIBIL and its role in credit risk management
By Ankit Sharma
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The structure and functioning of the Indian economy has witnessed many changes with time. With economic development setting in, there have been profound changes in the use as well as extension of credit.

While there has been improvement in credit facilities and increase in modes of credit, another factor which has also risen at par with these is risk. This means that rising credit opportunities also necessitates the need of protection from risk and defaults.

An effective way to hedge credit risk is to obtain accurate information on customers and their credibility. Such information would allow lenders to pre assess the repayment capacity and intention of the borrower before extending credit to him.

If each bank/financial institution individually strives to attain credit details of all customers, they would be unable to gather exhaustive information about all.

Thus in order to have exhaustive information, the need arises for a central repository of information. In India, this data bank bearing credit information about all borrowers is the Credit Information Bureau (India) Limited (CIBIL).

An associate member of the Indian Banks' Association, CIBIL provides reports which are four dimensional that is

a) independent

b) centralized

c) comprehensive

d) reliable


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(Comments Posted : 3) Post Your Comments
1. I have taken a personal loan from Money Line Credit Ltd. I have paid total amount and there is no dues as on date as per their statement and clearance letter. But when I applied for a home loan, there was a over due amount showing in their CIBIL report. Hence my home loan application is kept pending / not processed. This has been informed to CIBIL also, but my requests are not considered at all. Can any body advise on this. Should I go to consumer forum on this. If so what will be the impact ?

Regards,
Ranga
MV Ranga Rao (Posted: Aug 5, 2011)
2. Very informative artice, Indeed CIBIL Credit Report and Credit Score plays an important role in credit decision. The score will also mature and become close to accurate over a period of time. I am sure the day isn't long when financial institutions will make a credit decision only on the basis of credit score!!

Regards
Aparna
info@rectifycredit.com
Aparna (Posted: Nov 20, 2010)
3. Very informative artice, Indeed CIBIL Credit Report and Credit Score plays an important role in credit decision. The score will also mature and become close to accurate over a period of time. I am sure the day isn't long when financial institutions will make a credit decision only on the basis of credit score!!

Regards
Aparna
info@rectifycredit.com
Aparna (Posted: Nov 20, 2010)
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