[kingjulian]

Related Thread

I am not sure how many BHPians have had to deal with the credit reporting organisation CIBIL and its wayward ways but having had a nasty experience of my own, thought it would be worth sharing my experience here. Proceed only if you approve of sarcasm.

It all started when I planned to finance a deal for buying a pre-owned Ritz diesel through a personal loan. The loan application with HDFC was promptly rejected because of "CIBIL report issue". From here started my painful and hellish journey confronting an organisation which functions in way which is at loggerheads with its reason of existence.

From what I gather from internet and a reliable source in the banking industry, private credit reporting institutions were allowed to be setup by the government as an easy way to get an individual's credit history so as to reduce the time delay involved in processing credit and loan applications. That is, banks report transactions related to credit (like credit cards and loans) to these credit reporting institutions (which need to be licensed and authorised by RBI) every month. The credit reporting instutions have a concept of membership to which only banks (PSU and private) are permitted as members. Only members are allowed to report data and any data editing should be authorized by members. CIBIL is one such credit reporting and information gathering institution and is not government owned but instead owned by a consortium of banks - the same ones which have time and again shown remarkable ineptitude time and again to serve the customers needs. So banks which themselves have failed to keep their customers credit data confidential now think it is best to give this data to an outside organisation of which they are NOT the majority shareholders.

I continue for the sake of those to whom the path to where this doomed train leads to is not yet clear. So we have banks reporting data to this organisation and banks relying on data from this organisation - lets call it CIBIL from now on- when it comes to giving out loans. Data about me and you - the customers - who is nowhere in the loop and whose data is being shared and passed around freely without his/her knowledge and without bothering to verify if that data is authentic. This data (seldom fully correct) being shared about you and me is called the CIBIL report. CIBIL "prepares" this reports when enquired by banks ; and to customers on payment of Rs 470.00. The other aspect of this report is the mysterious CIBIL score - which CIBIL says is meticulously calculated but to me looks pretty much a random number between 300 and 900 - which has equally mysterious interpretaions in the market. Apparently, high score is not enough. Google informs me that a guy with 800 got his application rejected while someone with 650 had an approval.

One should thank his/her lucky stars if his/her CIBIL report has no issues which my informal enquiries have revealed that is not the case. The CIBIL report preparation is apparently based on a few match-the-following type questions and apparently on your first name. So unless you are one of those with unique names like Zaphod Beeblebrox, do not be surprised if you end up sharing the credit history burden of your fellow countrymen with similar names or same dates of birth. Perhaps they have not heard of a unique number called PAN based on which the credit history can be referenced.

To cut a long story short, I received my CIBIL report fully loaded with 11 credit cards when all I own are 2 - T W O - credit cards. For good measure, one of the two cards that I own does not show up in my own credit information report or what the CIBIL calls the CIR. Although they have a laughable process called dispute resolution where you can dare to query the CIR only likely to be replied that the CIR is correct and if you still have problems YOU can contact the bank who reported the data. So not only do CIBIL creates the problem, they expect me to resolve it . Easiest 470 Rs ever made. Obviously CIBIL knows that the customers whose CIR is erroneous will get it rectified and with the fear of God put into them now, will take out these CIRs on a regular basis. Keeps those cash registers ringing for CIBIL.

I called up the four "major" banks whose 10 credit cards are not mine but nevertheless have made it into my CIR - some of the people at customer care are guarded at my enquiries, others unwittingly reveal that it belongs to some other guy with same name as my first name and staying in Mumbai. Some of them even enquired why I was not paying regularly AFTER listening to a ten-minute-rant of mine explaining that this card does not belonging to me. As of now, I am busy writing mails, cajoling customer service heads and begging nodal officers to resolve my case. In the interim, HDFC has the nerve to call me and ask that they can revive the loan application if I agree to a higher rate of interest and if I do so , they will turn a blind eye to my CIR.

So request BHPians familiar with the workings of CIBIL and its member banks to enlighten me as to why an institution whose report is at best mediocre , is allowed to function with a free hand . One can complain about the banks' behaviour to an Ombudsman but not CIBIL itself. Also, it is inexplicable as to why banks decide this report as the ultimate yardstick to approve/reject loans rather than go for a more broader approach that involves the customer himself. The banks are losing genuine customers just because they are found "guilty by CIBIL" and a worse scenario is an undeserving person getting credit only because he is "innocent by CIBIL". The only reason I can gather is to intentionally feed wrong data to gain an upper hand in the loan disbursal and wreck the customer's confidence by rejecting his applications.

This in a nutshell has been my experience with CIBIL so far - yet another organisation whose mandate is commendable but whose actions are anything but that. To those who have managed to cross this nine ringed hell at the first attempt congratulations and Godspeed...to those who haven't suggest you visit an earlier incarnation and do a good deed.

[shankar.balan]

Originally Posted by kingjulian

I am not sure how many BHPians have had to deal with the credit reporting organisation CIBIL and its wayward ways but having had a nasty experience of my own, thought it would be worth sharing my experience here. Proceed only if you approve of sarcasm.

It all started when I planned to finance a deal for buying a pre-owned Ritz diesel through a personal loan. The loan application with HDFC was promptly rejected because of "CIBIL report issue". From here started my painful and hellish journey confronting an organisation which functions in way which is at loggerheads with its reason of existence.

I called up the four "major" banks whose 10 credit cards are not mine but nevertheless have made it into my CIR - some of the people at customer care are guarded at my ence with CIBIL so far - yet another organisation whose mandate is commendable but whose actions are anything but that. To those who have managed to cross this nine ringed hell at the first attempt congratulations and Godspeed...to those who haven't suggest you visit an earlier incarnation and do a good deed.

Very well written post.
I totally agree that this level of 'arbitrary' functioning has got to stop. I only hope that a mechanism becomes available to easily correct these erroneous details, lest more innocent borrowers be made to suffer in this way.
It basically harks back to these basic problems; the huge population, uneducated clerks who do data entry, no proper verification or checks and balances, sub standard daa information, analytics and usage.
The PAN number should be the simplest way to get information about a person's finances. After all, it is a sort of indicator that one has honestly declared one's income and paid ones taxes.

[shibujp]

The credit rating system in India is still in it's infancy. From an outsider's view I do not think banks lay much store by the credit rating provided by CIBIL. They simply look at the size of your bank balance or assets and decide whether to provide you a loan or not. Most of the retail loans are mostly granted by manager on the basis whether you have the potential to be suckered into another loan in future. They do not care about how meticulous you have been with your previous emi payments, bills etc.

Another problem is the lack of a unique identifier. The PAN card is the closest that we have but even that can be and is regularly duplicated.

Secondly there is no competition. Unlike the US which does not have the above problems, and has three major credit rating companies - Equifax, Experion and Transunion, India has none - so CIBIL has no incentive to improve the accuracy until a point of time when retail consumers like us become their bread and butter.

It would have been easy for HDFC to share the report with you and given the known inconsistencies verify the facts to determine if you could be given a loan.

Drive on,
Shibu.

[NetfreakBombay]

Originally Posted by kingjulian

Perhaps they have not heard of a unique number called PAN based on which the credit history can be referenced.

That is a big problem in India. PAN numbers can not be used since it is common for a person to have multiple PAN numbers. Specially those who would want to cheat/game the system.

Hopefully, Adhar number will reduce the problem since collisions are significantly less with Adhar IDs.

As a customer, only thing we can do in this scenario is to monitor the report and correct errors proactively.

CIBIL must make report available free of cost to customers for this purpose.

[jkrishnakj]

I very recently got my CIBIL report, 470 bucks. Got this more out of curiosity than anything else. I was applying for a home loan thru SBI and thought it fit to get a report.

I was really surprised by the accuracy of the reports. When i mean accuracy, all i mean is the number of cards, loans in the past that i had and its history. It also gave telephone numbers that were used at different points. I had lived at Chennai, Pune, Mumbai and at three different addresses in the past 10 years at Bangalore, and each of those listed in the report were correct, perhaps, my name isnt so common.

What i do want to figure out is the scoring methodology. Like rightly pointed out in the first post, that process isnt transparent on how we get those three digits as a score.

[nick.cs]

Originally Posted by kingjulian

I am not sure how many BHPians have had to deal with the credit reporting organisation CIBIL and its wayward ways but having had a nasty experience of my own, thought it would be worth sharing my experience here. Proceed only if you approve of sarcasm.

Everyone who takes a loan get this report fished out by the banks at one time or the other. It is only the unfortunate ones who gets their loan rejected do come to know that this was ever taken out.

Originally Posted by kingjulian

So banks which themselves have failed to keep their customers credit data confidential now think it is best to give this data to an outside organisation of which they are NOT the majority shareholders.

Majority shareholding part is to avoid conflicts where one bank with a majority is trying to push through proposals. So more of like reach a consensus.

Originally Posted by kingjulian

I continue for the sake of those to whom the path to where this doomed train leads to is not yet clear. So we have banks reporting data to this organisation and banks relying on data from this organisation - lets call it CIBIL from now on- when it comes to giving out loans. Data about me and you - the customers - who is nowhere in the loop and whose data is being shared and passed around freely without his/her knowledge and without bothering to verify if that data is authentic. This data (seldom fully correct) being shared about you and me is called the CIBIL report. CIBIL "prepares" this reports when enquired by banks ; and to customers on payment of Rs 470.00. The other aspect of this report is the mysterious CIBIL score - which CIBIL says is meticulously calculated but to me looks pretty much a random number between 300 and 900 - which has equally mysterious interpretaions in the market. Apparently, high score is not enough. Google informs me that a guy with 800 got his application rejected while someone with 650 had an approval.

This data is usually to a major extent is correct. But however as you have rightly pointed out there is a huge scope for wrong reporting of data as i presume this is not usually double checked.
Also the score starts at 700 for first timers and then gets adjusted based on variuos parameters. So anything above 600 can be considered for approval. Also CIBIL is one of the parameters for passing of loan. For eg. a person who has a score of 800 but works in the stock market, hence his income is variable and hence his application could get rejected. However a person working in a government orgaization with steady income and score of 650 and who takes up a smaller loan amount could get processed. So that part is subjective depending on the banks internal policies.
The main intention over here is that we have a single repository of information for an individual customer because initially in the abscene of this a person can take credit card from 10 banks and keep defaulting. HOwever now atleast the 3rd or the 4th bank knows that he has already defaulted earlier in three places.

Originally Posted by kingjulian

One should thank his/her lucky stars if his/her CIBIL report has no issues which my informal enquiries have revealed that is not the case.

+1 to that

Originally Posted by kingjulian

Also, it is inexplicable as to why banks decide this report as the ultimate yardstick to approve/reject loans rather than go for a more broader approach that involves the customer himself. The banks are losing genuine customers just because they are found "guilty by CIBIL" and a worse scenario is an undeserving person getting credit only because he is "innocent by CIBIL".

A negative report is an ultimate yardstick as I explained earlier. But a positive one is not an ultimate yardstick. On having a positive report they check your other parameters. But if you have a negative report then one is supposed to be a defaulter in the first place and lending to defaulters is not a good proposition.

Originally Posted by kingjulian

The only reason I can gather is to intentionally feed wrong data to gain an upper hand in the loan disbursal and wreck the customer's confidence by rejecting his applications.

Giving out loan is bread and butter of banks. So i dont think they would intentionally do that. Plus there is a lag in the updation of records by say around a month so you giving a loan application and they messing with your records is still difficult.


However it is always good to check your CIBIL report before you take a loan as then you know before hand that things are wrong. Although this will be a pain knowing that you have been a part of inefficiency at someone else's end. However the intention is to have a single point for all the banks to talk to each other and see that someone is not misbehaving elsewhere which otherwise is not possible.

Unfortunately in your case they have messed up and I hope that your issues gets resolved at the earliest

[gopikb]

I also got my CIBIL report a few weeks ago just out of curiosity. The issues that I found in my report is similar to what kingjulian reported.

1. A credit card from Indusind bank is shown in my report while I never had any transactions with Indusind bank anytime in the past

2. My home loan which was closed five years ago is never shown in the report. This was from ICICI bank

3. My car loan which was also closed 5 years ago is never shown in report. This is also from ICICI bank

So it does depend on information from banks and there are some missed and included wrongly. Unless CIBIL sorts these things out, I guess it is people like us who get unnecessarily fleeced in timed of need.

[nick.cs]

Originally Posted by gopikb

2. My home loan which was closed five years ago is never shown in the report. This was from ICICI bank

3. My car loan which was also closed 5 years ago is never shown in report. This is also from ICICI bank

From what i know, CIBIL only stores data for the last 3 years only.

[gopikb]

Originally Posted by nick.cs

From what i know, CIBIL only stores data for the last 3 years only.

nick, Thank you. Was not aware that CIBIL stores data only for last 3 years. Does that mean that CIBIL was not in existence prior to 3 years? I thought it was around atleast for the last 10 years

[nick.cs]

not that it was not in existence, if you check your report only last 3 year's data is present any data before that is not included in the report. Atleast it was in my case. Any data prior to that only affects your score.

However in your case you have to also consider the fact that 5 years back the reporting may not be so diligently done/good as maybe in the past couple of years. So your loan report might have as well been missed out.

[kingjulian]

Thanks all for the replies.

Originally Posted by nick.cs

not that it was not in existence, if you check your report only last 3 year's data is present any data before that is not included in the report. Atleast it was in my case. Any data prior to that only affects your score.

It is 7 years upto which your credit history is maintained whereas the transactions shown in the report itself are for the last 3 years. So if you had opened a loan 6 years back and closed it within a year, this would still appear in your report (ideally )

Originally Posted by nick.cs

This data is usually to a major extent is correct.

This is quite not enough where the loan requirements are immediate - like one might take out a car loan when the offers come in limited, short timeframes; if an idea/facility fails for even one genuine user, in my humble opinion it is a gross failure and needs to be revisited and made foolproof. No point if the resolution takes 30-60 days and the loan is then made available with the erring banks getting away scot-free.

A more damning statistic is that as per ICICI's analysis of complaints for 2012-13 , CIBIL related issues are the second highest reason for complaints and a total of 6794 complaints were registered with ICICI for CIBIL related issues. Even giving a 50% benefit of doubt to the bank-CIBIL alliance, more than 3000 complainants got a raw deal because of CIBIL alliance. One can only imagine the grand total considering the number of banks doling out personal loans , the number of people who fail to register their greivance, etc

The basic intention of the thread is only to create awareness amongst members regading the lurking pitfalls for those who plan to take out any kind of loan; it is now an unstated requirement that one checks his/her CIBIL report before applying for a loan and set aside some time for any resolutions that may be needed and exactly counteracting the purpose where CIBIL was brought in - to speed up the loan procedures.

[kingjulian]

Originally Posted by NetfreakBombay

That is a big problem in India. PAN numbers can not be used since it is common for a person to have multiple PAN numbers. Specially those who would want to cheat/game the system.

This is indeed news to me , though I cannot say I am surprised since in India there is no dearth of people who take ill-placed pride in flouting the rule of law. Owning two PAN cards by the same individual is illegal and some cases should be dealt severely as an example to make an encourage surrendering additional PAN numbers. As you say biometric based Aadhar cards could mitigate this kind of a menace. One can only hope.

[NetfreakBombay]

Originally Posted by nick.cs

From what i know, CIBIL only stores data for the last 3 years only.

CIBIL stores account data for 7 years from closure.

Source : http://www.cibil.com/faq/dispute-consumer

As per the Credit Information Companies (Regulation) Act, 2005 governing Credit Information Companies, all accounts irrespective of their status (both Good Standing and Delinquent accounts) have to be maintained for a minimum period of 7 years from the date the account was last reported.

Originally Posted by gopikb

nick, Thank you. Was not aware that CIBIL stores data only for last 3 years. Does that mean that CIBIL was not in existence prior to 3 years? I thought it was around atleast for the last 10 years

CIBIL started functioning in 2004, but data quality was poor at the time. Accounts opened after 2008 should be reflected properly in CIBIL.

[VikrantD]

Originally Posted by nick.cs

From what i know, CIBIL only stores data for the last 3 years only.

Sorry, that is not right. I got my CIBIL report last in July 2012. I have a habit of drawing my report once every year.

My report contains data right from 2006, that's when I started working and got my first 2 wheeler loan in India.

Infact in 1991, my parents had an LIC policy in my name and they had availed an housing loan against that policy which was cleared in 2005. That too shows on my records. Beat that. CIBIL has all the information about you.

[sandeepmohan]

Seems like another incredible scam on the run.

I was lucky though. I don't recall paying so much for my report a couple of years ago and the information was correct based on the two credit cards I owned. I never quite understood their point based system though.

I don't have a clean credit history. Back in 2004, the company I worked for decided to dump all its employees and we were left in the dark. Nobody was sacked. All the big wigs just stopped coming to work and no salaries came. We are talking of about 200 employees who still kept coming in to work without pay. Most of us had credit cards. I had one with HDFC with a 15K limit. Salaries were not so much back in the day in my line of work. As no pay came, I could not pay up and I absconded. On returning to Bangalore, the new company I signed up for decided to have our salary accounts with HDFC. I got caught and I asked for settlement to which the bank agreed. I was to pay 19K which was the interest-ed amount. Settlement amount was 15K. I paid this and also received a letter from HDFC saying the matter was settled. When I approached SBI for a car loan, this sprung up as my CIBIL report indicated a slip up in my past payments. I presented the credit card settlement letter from HDFC bank and this pretty much sealed it over the CIBIL report that I could get a loan. SBI issued me a loan with a problem.