Have you ever gone to purchase a car or a new house and had to apply for loan for the same, then you would have noticed the loan provider mentioning CIBIL and how your loan cannot be passed as you have a low score with CIBIL. A name you have never heard before in you life.
I have already written a article about the realities of the Stock market and Insurance. This has happened to many new home buyers or car buyers. The dealer will then suggest you to get in touch with CIBIL. When you contact CIBIL you will come to know that your scores are low due to following reasons
1. Past payment on Credit Card is not done and the case has not been settled.
2. You have never availed a loan before so your score is low.
3. You have not repaid previous loan with some other bank or paid it after some negotiations/after due date.
OF the above I can understand point no. 3 but point No. 1 is the most prevalent and often the prime cause for low CIBIL scores. In most cases you may have made payment and not received a settlement letter(a duty of the credit card co. to provide the same) or you may have a credit card earlier which you may not have used and the annual fees have not been paid by you. Now the Credit Card companies usually treat this as default and go on adding penal interest on the amount, which at the time of buying your new house or car becomes a really big amount. Another issue is if you have never taken a loan in your life it proves that you dont need/never needed any financial help for outsiders before approaching for your home loan/car loan. How can should this decrease your score I fail to understand. In fact I believe the score of such individual should be very high given the fact that he/she has never taken a loan. But CIBIL looks at it differently.
Now if you want to buy you new house or car you have to clear this amount. It seems really silly at that point of time but this how the setup has been put in place to ensnare a person in such a way that without clearing the past dues he wont be able to get his new car or home, however stupid/unrealistic or cheating the old pending amount may seem.
CIBIL is actually a Credit Information Bureau set up by multinational TransUnion International Ltd. and Indian Banks as associate share holders. It is actually a one stop shop for banks to know if a person applying for loan is credit worthy or not.
But over the years CIBIL has developed into a cartel for the same banks.
I have suffered from the 1st case where I had made payments to SBI Cards in 2007 but they failed to issue me a settlement letter for the said payment. However when I went to apply for another card from some other bank in 2012, after whole five years in which SBI Cards never bothered to contact me, the other bank approached CIBIL for my credit rating which was 606 (I obtained the rating later) . Now the bank refused the new card to me, not that I needed it so much.
However when I studied the CIBIL report, I was surprised that only those payments had been listed where I had made a delay in payment due to some financial problems. The payments made by me on time to Nationalised Banks were not taken into account. Even a home loan availed by me from Bank of Maharashtra, a NSE and BSE listed bank, and prepaid by me, was not added to the CIBIL score.
On raising a dispute with them, they sent me a email that a dispute has been raised in the matter and will be resolved in 30 days. But as of today I am to hear from them.
In the meantime I received another email from CIBIL saying that I required a Financial consultant to repair/improve my credit scores. When I visited the website of the said improvement company, It asked me to pay Rs.10000.00 upfront to become its member and then it would issue me a new card, which I should regularly use and make payments, which in turn will improve my credit score.
On reading the above para you will understand, that CIBIL appears to be a blackmailer in white collar, who is inducing me to spend my Rs.10000.00 and get another card, which I don't need, just to improve my scores.
I have also raised dispute with SBI Cards and CIBIL for the earlier point no.1 but have still not received any reply. I have also approached the Reserve Bank of India's Banking Ombudsman to resolve the matter.
My argument is simple why should a individual go for a unnecessary loan/credit card just to increase his score and fall into another debt trap.
Many of you may have gone through the above situations, kindly post your suggestions/comments or email me so we together can approach a competent authority to stop the Banks and CIBIL from forming a CARTEL which is not allowed under Indian laws.