Readers' Corner: Mohan Jayaraman

My application for a four-wheeler loan was rejected, stating I was in the defaulters' list. Whereas, this is the first time I have applied for a loan. How should I go about this problem?
First, enquire with the bank to understand the reason for rejection and ensure the correct details were entered by the bank while obtaining your credit information report (CIR). Try getting a copy of your credit report from the bank.

Independently, it is recommended that you get a copy of your CIR prior to applying for any future credit or loan, from a credit information company (CIC). The CIR contains detailed information of your credit history, including identity information, credit accounts, loans, payments and recent enquiries. After you receive a copy of your CIR, compare the report with the one obtained by the bank. If both versions contain the reference to the default, approach the respective bank/ financial institution or contact the respective CIC to rectify this, providing adequate documentary proof. If there is a difference between the two reports, point it out to the bank where the loan application was made by providing the copy of the credit report.

How do I improve my credit score and what are the steps to follow?
Credit score is a numeric summary of your repayment history of previous or existing loans and credit cards and from the enquiries performed by banks and financial institutions based on your loan application. Self-discipline in financial matters by paying back the borrowed amount (EMIs) on time and as agreed to the lender is the foremost step to ensure a good credit score.

All repayments and missed ones are recorded on your CIR, as these impact your credit history and credit score. Pay your EMIs and credit card dues on time and as agreed to the lender.

Monitor your joint loans or loans where you are the guarantor regularly, since you are held equally liable for missed payments. Inquiries made by lenders because of an application you made for credit or loan can affect your score.

Too many inquiries might mean you're taking on too much loan or you're in some kind of financial trouble and are looking for credit to help you out.

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in