A report that matters

All banks look for credit info before sanctioning a loan. You should learn to read it.

Ever wondered what lenders see in a credit information report (CIR) before giving a loan? Compiled by Credit Information Bureau (India) Ltd, or Cibil, the report provides such information as past residence addresses, telephone numbers and enquiries a person has made for different loans, among other things.

This report was earlier available only to banks. Now, you also can get it by sending a demand draft of Rs 142 and photocopies of identity and address proofs to Cibil. Even lenders can provide you this report, in case they have rejected your loan application based on it.

Let’s look at the information in the report and how bankers interpret it.

Report header: This contains the customer’s name and the time and date the report has been generated. When an applicant seeks clarification on his/her report, the control number is the header that serves as a reference.

Consumer information: This has details such as date of birth, telephone number, gender, and so on. It also has up to four addresses a person mentioned while borrowing money or getting a credit card, besides PAN card, voter ID and passport numbers.

Summary: This is the first thing the lender looks at. This section summarises the entire borrowing history, including the number of loans or credit cards a customer has/had, the amount overdue, and so on. Obviously, several loans or a large outstanding on credit cards is not a good sign. In addition, there is information about delayed payments. The report provides the highest amount one has availed of as a loan, reflecting the potential borrower’s bankability.

Accounts: Monthly payment, dues and outstandings – all this is captured in this section, to the minutest detail possible. It even contains such information as when the first credit card was issued to the customer and the date of last repayment of a loan/card due.

The important thing one needs to check is the status of each loan, the last column in the report. This tells you how the bank has reported the transaction to Cibil. Let’s assume a customer has a dispute with the bank over a small penalty amount. There is a possibility the lender may report the person as a wilful defaulter.

This section uses jargon to define the loan status. For instance, if the status says ‘suit filed’, it means there is an ongoing case for non-payment, or if the customer has not paid for over 180 days, the status will mention ‘written off’. For someone who has renegotiated an ongoing loan due to any payment issues, banks mention it as “restructured”.

This section also captures the repayment history on a monthly basis for the past three years. Above every equated monthly instalment (EMI) date, there is a three-digit number. This number tells the lender if the loan was paid on time or delayed. Say, a borrower pays the bank 14 days after the due date. CIR will have 014 above the EMI date. Timely payment is reported as 000.

Banks also have their own reporting style. At times, the remark may just say STD (standard). This means the person has not paid on the due date but the lender is hopeful as the non-payment has not crossed the 90-day limit.

Once it does so, the remark changes to SUB (sub-standard). If the bank does not receive any money for 120 days, it is reported as DBT, or doubtful. Non-performing assets or non-payment over six months is mentioned as LSS (loss).

“For example, if you have applied for a credit card, more than one delay gives an impression that the person is habitual of not paying his dues on time,” added Arvind Hali, head — retail assets at Dhanlaxmi Bank. If Cibil does not receive any data about repayment, there is xxx above the EMI date.

Enquiry: The final part of the CIR contains information about enquiries the applicant has made. The entries here can run into hundreds. Every time an institution accesses a person’s Cibil record, the system captures it.