FLAME Newsletter - August 01, 2012


It doesn’t matter where you come from...it just matters where you are headed.

While your future plans and actions might sound like the only things that matter when it comes to investing and business, lenders will not necessarily believe in this principle. When you approach a lender for a loan, he will most likely want to have a look at your credit history and repayments. If you are a first time borrower, he will likely ensure if you have enough resources to repay the loan.

The Credit Information Bureau of India Limited, or CIBIL, is the Indian company who keeps track of all your credit information. Every time you take a loan, they collect information about your loan amount or repayment records from the lender. Every lender must inform them about their borrower’s information in detail. This enables CIBIL to keep a track of the credit history of every borrower. Credit history is also considered when a borrower wishes to take another loan in the future.

How this helps us?

A credit report is very important for us to get a loan. These reports are examined by the lenders when we apply for a loan. The report provides them with our credit history and helps them decide whether or not they should approve our loan.


To make things simpler, CIBIL generates a score between 300 and 900, 300 being the lowest, and the score you get reflects your overall credit history status. CIBIL never explains the process of generating the score to you.

What affects the score?

Even though you are never told the fine points of the score generating procedure, you should understand what exactly you should or should not do to get a good credit score. The main factors that affect the score are your repayment history, the amount of debt you have, your source of income and the number of loan accounts you possess. That means, if you pay your Equated Monthly Installments (EMIs) in time and have a sufficient income to repay the loan you are applying for, you can get good scores and thereby get the loan with relative ease. 

How can you get a copy of the report?

When you need a loan and you want to ensure you get it easily, you must maintain a good credit score. Remember that what you will see on the report is exactly what your lenders will see before deciding on your application for the loan. It is always wise to spend Rs. 450 once a year to get a copy of the record and analyze your credit history yourself. 


Importance of the CIBIL report

The CIBIL report contains complete information about an individual’s credit history. A lender generally seeks this report before deciding on a loan. If you are applying for a loan, you must be aware of these ten points and their implications in your CIBIL report.

1. Month to month record

CIBIL is a monthly report about all the loans an individual has ever taken. It displays information about your home loan, car loan, personal loan, credit card debts and all other information related to credit.

2. Why is it used?

When you apply for a loan, the lenders want to ensure that you will be able to repay the loan. They refer the report to gauge how much loan you currently have and if you can bear another one.

3. Reputation

This report is a proof of reputation of sorts due to its credibility. If you have managed and repaid all your loans in time, it will strengthen your chance of getting a loan.

4. Knowing your report

Before you apply for a loan, you must buy a copy of the report and look at it yourself first. You can accordingly gauge your credit position from the point of view of a lender.

5. How to get your CIBIL report?

Log on to the CIBIL website. You will find a form that you have to fill in order to avail the report. You will be required to pay a nominal charge. 

6. How will it help you?

Once you have the report, go through it to know the complete details of your credit history. It will help you understand in which areas you need to improve. 

7. What it shows?

The report mainly shows the payment history of your loans. It shows how much loan have you cleared and what is your current debt status.

8. Updates of the report

Lenders regularly present information to CIBIL, hence, the contents of your report change constantly. As the updates come regularly, the ratings can change every day. 

9. Can CIBIL update the report?

CIBIL can never update anything on your report by itself. They can only update your credit report when your lender sends a report to them about your loans and repayment. Also, if you notice any discrepancy in your report, you can approach CIBIL to rectify the same.

10. How to better your report?

If you want to maintain a spotless credit report, you must maintain your credits well. It’s important that you repay all loans in time and in full amount. Handle your finances with discipline to ensure that there are no hurdles when you require credit.

What you should do when there are discrepancies in your credit report?

Every time you apply for a loan or a credit card, the providers check your credit report for your credit information before actually giving you loan or a credit card. However, what if the credit report with CIBIL is does not state the correct facts? What do you do then, well read further and find out how to solve a dispute with CIBIL.

1. Evaluate the credit report

It’s your right to get a credit report from CIBIL. You can get the report online from the bureau’s website for a very nominal fee. Go to the website and fill in the necessary forms with the payment option to get your copy of the report. 

Go through the report carefully to understand everything and check if all your information and credit history is right. Any wrong information can cost your loan eligibility. If there is any problem then take actions to correct them.

2. Filing a dispute

If you see that the information is incorrect then you have to alert CIBIL with it as soon as possible. You have to write an application to them regarding the concern. The format of the application and their address can be found in the website.

The application must contain your complete name, contact information, the disputes you want to be corrected and the right information of the incorrect data. Include the copies of any proof that supports your application of dispute. You can also attach a copy of the report with highlighted incorrect information. 

Use a certified mail service so that you have a sending receipt. This will work as a proof that you have sent it. Ask for a return receipt also to make sure that the CIBIL has received your mail. 

3. The CIBIL response to the dispute

The bureau takes 30 days to report back you, by mail about the results of their analysis about your reported dispute. Your provided data goes to the information providers and they have to report to CIBIL about that. You will receive a free copy of the corrected credit report from CIBIL. If you already have applied for a loan then you can request the bureau to send your lender a corrected report.     


Consumers often incorrectly believe that credit scores are influenced by income.


Fiscal Drag

It is a huge budgetary surplus that might be created by the tax system as the economy approached full employment. Fiscal Drug may act as a brake on the growth of the economy.


As expected, the Reserve Bank of India kept its key interest rates unchanged as it continues its battle against inflation and stares at a possible drought in the country. What came as disappointment is that the apex bank reduced the estimate of growth to 6.5% from 7.3% and also upped its inflation forecast to 7% from 6.5% at the end of the year.

RBI maintains status quo on key rates…Cuts SLR to 23%    

There is a change of guard in some of the ministries. After Pranab Mukherjee became President and Manmohan Singh was interim Finance Minister, the top job has once again gone to P Chidambaram. Since that meant a vacancy at ‘home’, Sushil Kumar Shinde has stepped in to fill in his shoes.

P Chidambaram takes charge as FM

P Chidambaram: Architect of ‘Dream Budget’ is back


FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India's spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation's economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL's FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

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