There has been plenty of coverage on the availability of CIBIL TransUnion Score directly to the consumer for Rs. 450. For those of you who are wondering what the hulla ballu is all about here is the low down.
I think most readers are aware that Credit Information Bureau of India Limited (popularly called CIBIL) is a credit information company that collects information from all banks and lenders on all their borrowers about the,loan,amounts disbursed and the repayment track records. Contrary to popular opinion the lenders are required to provide all repayment track record information (good or bad) about all their borrowers (and,credit card,holders). So if you have been servicing a loan or a credit card in the last 3-4 years, information about you will be with CIBIL. Thus there is no stigma attached to the statement My name is in CIBIL. Well I know my name and record is and it conveys the story about my punctilious repayment track record on all loans and credit cards that I have.
That itself will ensure that the banks treat me well if and when I apply for a loan or credit card facility. Now I will be able to get a report from CIBIL, that apart from the details of my repayment track record will also contain a generated score between 300 and 900 that essentially denotes the chances that I will default on my loan obligations. If my score is 900 then the lender interprets it to mean that the chances of defaulting on my loan obligations are virtually nil whereas if it is 300 then the means that my chances of defaulting on my loan obligations are very high. CIBIL derives the score by a proprietary process (meaning that they will not tell me why I got a lower score whereas somebody else with a similar history got a higher score).
Of course CIBIL gives broad pointers on what affects the loan score. So if I have defaulted on credit cards or loans in the past few years then you can be sure that your score is not going to be very good. But there is no clarity on the finer points taken into consideration while granting the score which distinguishes one customer from the other though prima facie they have a similar credit profile. So much so that even two siblings who are having similar credit profile, may get a differential of 30-40 points in their credit scores. The finer points affecting the scores will get known slowly over a period of time.
As a general rule if you have a reasonable number of credit accounts ( Credit cards & loans) that have been operational for some time and your repayment track record has been good then you should have a good score. CIBIL is naturally chary of saying what is a Good score since that is for each lender to interpret.
The table given below can be a good guide:
1. Score of 600 and below Not Good Unlikely to get any loan/ credit card
2. A score between 600 700 – May get a loan or credit card but after some further investigations
3. Score between 700-750 Satisfactory }
4. Score between 751 800 Good chances of getting credit card/loan,5. Score of 800 & above Excellent
Mostly banks are using the credit score given by CIBIL to decline credits to those customers whose score is lower than 600. It is still not being used by lenders to provide better rates or quicker service to consumers with higher scores. This will also happen over a period of time.
Should you spend Rs. 450 once a year?
By spending Rs. 450 on getting your credit score, you will get to know exactly the way your lender will perceive you though your lender can also provide you with the credit report with the score at the payment of Rs. 50 only. Though getting this report from the lender is bit of a problem logistically. Moreover, the report given by the lender will not disclose the names of the lending institutions but give the type of record and credit history. All in all, it is worth spending Rs. 450 a year to get this report annually. Think of this as a cent of a financial health check-up.