How A Free CIBIL Report Can Help Home Loan Seekers
At a recently held seminar 'Transforming Rural India through Financial Inclusion', Reserve Bank of India (RBI) Governor Raghuram Rajan had announced that the Credit Information Bureau of India Limited (CIBIL) would provide individuals one free credit report a year. According to Rajan, this report would help individuals improve their credit rating and petition if they see possible discrepancies.
This announcement has come as a piece of good news for home loan seekers, as an individual otherwise had to pay Rs 550 to access his one-time credit score and report from CIBIL.
MakaanIQ explains how a free CIBIL report is going to help home loan seekers.
Understanding the concept of CIBIL
CIBIL is a storehouse for credit information of all customers of all banks and financial institutions. It is an organisation that assembles the credit information collected from lenders (banks and financial institutions) and circulates the information for credit-decision making and lending purposes.
This information is shared by lenders on a monthly basis.
How will the free CIBIL report help home loan applicants
A majority of home loan applicants do not check their credit reports before applying for home loans; they are mostly unaware of the information available in a CIBIL report.
Also, not everyone is willing to pay Rs 550 to generate a CIBIL report. A home loan applicant who is aware also knows that as part of the credit appraisal process, the credit manager will anyway generate a CIBIL report to ascertain the applicant's credit information and the score. So, a home loan buyer will ultimately get to know his credit position reflected in the CIBIL report.
But what people generally fail to realise is that every information takes 60-90 days to get updated on CIBIL. So, in the case of discrepancies in the CIBIL report, the home loan sanctioning process could be put on hold and the particular credit variation could take time in getting invalidated and updated by CIBIL.
With a free CIBIL report, the home loan applicant could take a look at his score and take adequate steps to improve it or remove discrepancies, if any. The applicant could also be informed if any fraud loans were taken in his name.
A free CIBIL report will also enable the applicant to understand the loan sanctioning process from the lender's point of view. It will help him understand how trustworthy he can be from the lender's perspective and if he is worthy of getting a new credit. It will give him the idea about the kind of credit information the CIBIL report exhibits.