Borrower should check credit report before applying for loan says bankers

Many people have faced this situation when their loan applications have been rejected because their in front of your credit report it is written defaulted in repayment of loan or credit cards. To avoid rejection of loan one should check his/her credit report with Credit Information Bureau of India (Cibil) before starting negotiations for the loan.

According to bankers if the borrowers have the prior knowledge of their credit report it might help many from facing the situation of loan rejection due to an adverse report on credit history, especially loans to be taken for purchases such as buying a house.

The State Bank of India official handling retail banking said, “It is advisable that borrowers who have had past loans or have had credit cards should check out their credit score with Cibil before scouting for the best loan deal available. If the report has some adverse remarks, the person should try and get the issue resolved with the concerned bank which had reported the adverse credit history.”

According to officials to know about the credit report is very important for people who want to apply for a housing loan. The SBI official added, “Buying a house is often a once-in-a-lifetime purchase. Being denied a loan could be traumatic for the person who has identified the property.”

C S Jain, head of personal banking, IDBI Bank points out that people who might have any past disputes with lender or have some doubt that there might be some adverse remarks from Cibil due to default in repayment must try to gain prior knowledge of their credit history. Jain said, “If a person has a doubt that some past defaults might find a place in the Cibil report, he or she should approach Cibil for the details. However, it might not be required for persons who are sure about their past banking history.”

Cibil has the database of borrowers of 175 lending institutions which include banks, housing finance companies, financial institutions and non-banking finance companies, among others. These lending institutions can access the database which helps them to assess the history of those who have applied for loan, to avoid defaults, frauds and minimize non-performing loans. If there is any adverse remark from Cibil in a person credit report can endanger the chances of getting loans.

Recently Financial Chronicle has reported that, in many such instances it has been noticed that borrowers loan application are rejected by the lenders due to adverse credit report from Cibil showing past defaults or credit card transactions of which the borrowers are not aware.

Cibil’s managing director, Arun Thukral, told FC that borrowers can avail the Cibil window that provides individuals access to their credit history. Thukral said, “We provide the individual the details of their credit history on payment of a nominal fee.”

He said that the credit report provided to the individual will have the exact detail of the transaction on which the default is understood to have happened in the past.

But the credit history that is shared with lenders does not show the names of the institutions with which the individual has been in default. Thukral said, “If there is any dispute over the defaults, the individual can approach us or the bank in question to get the issue sorted out before taking a loan.”

Cibil’s credit information report (CIR) can be obtained by sending an email along with documents such as providing an identity proof, address proof and the requisite fees.