Q Will every individual find his /her name in Cibil ?

Ans. This is a wrong notion which has been spread that if a customer does not pay his dues on time, he will be reported to Cibil. Any individual having a Pan card will anways feature in the Cibil records. What is important is the score which Cibil gives an individual depending on his credit behavior and repayment track record. Customer can have a good score when he is perfect in his repayment history, a bad score if he has defaulted or has some issue based account in his report or a NH ( No History) status where the customer has not availed any type of credit till date.

Q. Which are the Credit Bureau’s in India ?

Ans. There are currently 4 Credit Bureau’s in India : 1. Transunion Cibil 2. Experian 3. Equifax and 4. High Mark

Q. Are there any difference in scores for the various Bureaus ?

Ans. Different Bureau’s may use different methods to calculate the Credit Score. But a Financial Institute has to report about a Customer’s payment record to all the 4 bureaus. Therefore the Score which is calculated by the 4 bureaus will not have any major difference.

Q.What does a score in the Report indicate ?

Ans. 750 and above - Perfect score and Banks and Financial institutes would be more than willing to offer Credit to an individual with such a score.

600 -749 - A good score. In most cases, the loan will be approved with such a score

450 -599 - Not considered a good score. Some Financial institute may consider a Credit application with such a score. But even if the credit is approved, interest rates will be on the higher side.

300 -449 - A Poor score and getting a loan with such a score will be impossible.

Q.Does my Credit score fall if I check my credit score ?

Ans. There are 2 types of enquiries : Soft and Hard . When an individual checks his score it is known as a Soft enquiry and does not impact your credit score. While a Hard enquiry is done by a Financial Insitute to check your credit history and take a decision on your credit application, whether to approve or reject your credit application. Such an enquiry brings the credit score down by a few points. MyFundBucket will be doing a Soft enquiry on behalf of the customer with the High Mark bureau . Therefore there will be no impact on the credit score from such an enquiry.

Q. Should you bother about a Credit Score in today’s scenario ?

Ans. In today’s scenario any Financial Institute will want to check the Credit history of a credit applicant before approving or rejecting the application. Therefore it is important to know your credit score before applying for any form of credit. When a person with a low credit score keeps applying for credit, every rejection of credit will result in the Credit score falling further down.

Q. What are the major factors affecting Credit score ?

• Payment Track record : If an individual makes late payments ( after due dates) OR defaults on EMI’s or has Settled an account OR has willfully stopped paying dues and the account has been written off, these factors will affect the credit score negatively.
• Ratio of Unsecured loans is higher than Secured loans : If an individual has a higher percentage of Unsecured loans ( Personal Loans/Credit cards) then secured loans ( Home Loans/ Car Loans), this will affect the score negatively
• Multiple applications for Credit : This will indicate a desperate hunger for Credit and will affect the score negatively
• More Credit utilized : The higher credit limit used by an individual will increase his outstanding dues which in turn may affect the score negatively.
• Defaults where an individual is a Co-applicant, Guarantor or it is a Joint account in a loan : Any default by the main applicant in such scenarios , will have a negative impact on the Credit score of the co-applicant , guarantor or joint account holder
• Always periodically check your Credit report for any errors : Errors made by Bureau’s in the Credit report can negatively affect an individual’s credit score

Q. How can one improve one’s Credit Score ?

• Repayment on time : Always repay all your dues well within the due date specified by the Financial Institute. Do not bounce any EMI cheque’s as this will negatively affect a credit score. Never settle a account as Settlement is considered as a Red flag by Bureau’s.
• Use Credit wisely : Do not use too much credit. Keep a balance and within limits. Never take the utilization to the maximum of the Credit limit sanctioned.
• Mix of Credit : Maintain a healthy mix of Secured ( Home Loan /Auto Loan) and Unsecured ( Personal Loans/ Credit cards) loans . Higher ratio of Unsecured loans in the credit mix will affect the credit score negatively.
• Apply for Credit in moderation : Do not continuously apply for Credit . This will make an individual appear credit hungry and will negatively impact the credit score.
• Always periodically check your Credit Score / Report : It is advisable to periodically check your Credit score and report to see where you stand with regards to your Credit Health and take immediate remedial action if required.