These Are The Myths About CIBIL Report

Home loan applicants worry about their Credit Information Bureau of India Limited (CIBIL) report as much as children worry about their report cards. However, both only reveal what you had done in the past.

The CIBIL report reflects your credit history and says how well you have treated your liabilities in the past. The CIBIL report plays a very important role in one's financial journey. It instils some degree of transparency in the credit appraisal of home loans. If your lender tells you that your home loan application is rejected because of some serious discrepancy in your CIBIL report, you do not have to take his words at face value. You can actually check your CIBIL report to understand why it was rejected.

MakaaniQ tells you more about the myths about the CIBIL report.

• The biggest myth associated with CIBIL is that a low CIBIL score means no home or mortgage loan. Many lenders in the market offer loans with different credit policies. If one lender rejects your home loan application, find out the reason for rejection and approach another lender with supporting documents that justify the problem. Moreover, high fees and charges often compensate a low CIBIL score.

• Many applicants believe that the CIBIL score is meant only for home loan approvals. This is not true. The CIBIL score is established after reviewing your credit card payments as well. CIBIL reports are not just for the use of banks and financial institutions. It enables borrowers to maintain financial discipline and thereby, to increase their odds of getting any form of credit. A healthy credit history leads to a healthy credit future.

• Applicants also believe that assets and investments affect CIBIL score. This is not true at all. Your CIBIL report only contains details about loans and credit cards. The CIBIL score is not determined based on your savings, investments or assets. Only a delayed or unpaid home loan equated monthly instalment (EMI) or credit card payment will influence your CIBIL score.

• The CIBIL maintains a list of defaulters. This is another popular myth about CIBIL. If you need a detail pertaining to any form of loan or credit card, you will find it in your CIBIL report. But if you are looking for a CIBIL defaulter's list, then you are looking in the wrong place. CIBIL does not have a record of defaulters. Banks and financial institutions evaluate the CIBIL report based on their credit policies to decide whether to grant a loan.

• CIBIL score of minus 1 (-1) is the best. The CIBIL score of minus 1 means no credit history. This means that the applicant has never taken any form of credit. Lenders, in order to appraise the home loan application, look for some form of credit behavior or history to assess the credit behavior pattern of the applicant. A clean repayment track is more reliable than no credit history at all.

• Many home loan buyers fear that if they keep checking their CIBIL score and report at different time intervals in one year, their CIBIL score will be affected negatively. In fact, it is better to check your CIBIL report from time to time especially if you have different forms of credit or loans running. For example, if there was a delay in paying home loan EMI because of some technical operational issue in the bank (and not due to lack of funds or careless at your end), you must check your CIBIL report after 2-3 months, to see if there are any Days Past Dues (DPDs) that reflect in your CIBIL report. Your CIBIL score will be affected adversely for no fault of yours in such a scenario.