Article

Credit Information Report (CIR) - Rules and Other Facts
August 01 , 2013

Banks and NBFCs that are in the business of lending to people need to verify whether an applicant is loan-worthy before entering any deal. It is similar to the situation you'd encounter if an acquaintance approached you to borrow some money. You'd first want to ascertain whether he's capable of paying back. Based on this you'd decide how much you're willing to lend on what terms.

Credit Information Companies (CICs)

Now think about how banks and lenders can ascertain credit worthiness of total strangers- individuals and companies- that approach for loans or credit cards. They put some safeguards in place, for instance, making guarantor necessary, seeking collateral and verifying that the borrower has a reliable income source. However like they say, prevention is better than cure, any day. So RBI set in place a regulation that allowed companies to do the business of collecting, processing, collating and disseminating information on past credit data of borrowers to interested lenders.

RBI rules made it mandatory for any financial company involved in the lending business to register with at least one of the credit information companies and provide data relating to credit information on a monthly basis.

Credit Information Companies in India

Presently these have RBI's approval to function as Credit Information Companies in India- Credit Information Bureau (India) Ltd (CIBIL), Equifax Credit Information Services, Experian Credit Information and Highmark Credit Information Services.

You can collect your report from CICs for a fee, not exceeding Rs 100.

What do credit information companies do?

CICs like CIBIL only collect credit information from banks or other lenders who are their members and collate the data to present report on credit behaviour of borrowers. Nature of data collected is on type of borrowing, duration of loan and repayment related information.

These companies are required to maintain secrecy in dealing with information available to them and ensure they are not used in any way other than for the purpose prescribed. Data with Credit Information Companies is maintained with them for 7 years.

The purpose of Credit Information Report is not to harass you in any way, though it turns out that many lenders are engaging in just that. Know your rights as a borrower. Your lender bank is obliged to do these:

1. Disclose your credit report if you ask for it, and charge a fee if required, for giving you a copy of it

2. Consider your request for correcting details submitted to CICs and notify the CIC of changes within 30 days

3. If ever you are denied a loan or credit card on the basis of a Credit Information Report (CIR), the bank or NBFC concerned should send a written explanation as to why your application is being rejected along with a copy of the CIR within a month. It must also disclose which CIC provided the credit report.

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