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The impact of credit scores on your chances of getting a loan

By Sally Maison
Published: Monday, May 10th, 2010

RUBRF-00013867-001Earlier money lenders depended upon their own considerations before lending money to the customers, but now, lenders have an easier way because of the available credit records of customers with the help of CIBIL. Be it your auto loans, home loans, credit cards or personal loans, the rates given to you would be based on your credit history. CIBIL has already expanded its wings in this space having a large number of people holding their credit reports. It is now important to check your credit score and keep it between 350 and 800 to choose from the loan options provided to you.

If you haven’t been given a loan in any part a world, don’t worry, you can approach a few lenders who are professionals in lending money to those who survived a bad credit situation. But right now, India doesn’t have such kind of lenders, so it is very important for you to know your credit scores so that you can get loans.

About your credit score

It contains details like date of birth, number of the passport, etc and some basic information like name, address. It also contains bank details like payments made, late payments, last payments, overdue amounts, accounts, the closures, the credit that is sanctioned for credit cards, auto loans, personal loans etc.

As the information in credit agencies might differ from each other, the credit scores tend to be different as well.

In different countries, like the US, where separate credit records exist, information from the market shows that your credit records differ from different agencies. Only when you access into your records in all the agencies would you spot out the errors made. About 25% of the people are denied credit because of such errors.

It is very significant to access your credit score in order to keep yourself protected from such errors.

If you find an error in your score, you can report it to CIBIL with evidence. If no action is taken, you can file a complaint with the banking ambudsman’s grievance cell that will solve the issue without a biased opinion.

Abc bank had given a lone to Mr. Rajat. He paid all his EMIs on time. He also took an auto loan from PQR bank and had a few defaults in the payments. Now he applies to ABC bank for a personal loan which he will be granted because of his on time payment of EMIs. What he was not aware of was that ABC bank took his credit scores from CIBIL. Now his personal loan could be rejected or would be given with high rate of interest.

It is very important to monitor your credit scores.

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