CIBIL: Banks are lending wider and smarter

NAGPUR: After being tight-fisted following the slowdown of 2008, banks have once again begun actively lending on retail front, doling out personal loans and new credit cards, says a survey by Credit Information Bureau(India) Ltd (CIBIL). Since 2010, retail lending has jumped 150%. As many as 63% of the new borrowers are people below 35 years of age, says CIBIL data.

CIBIL has also made a state-wise comparison of age profile of borrowers. This shows Maharashtra has 21% of borrowers below the age of 26 years and 42% between 26 and 35 years, which is the highest number of young borrowers. The national average is 11% and 38% in these age categories respectively. Borrowers above 60 years make just 5% nationally.

CIBIL maintains the borrowers' repayment details which is referred to by the banks while processing loan cases. If a borrower had delayed payment or defaulted on any of the loans, a different bank processing his case can know this by referring to the CIBIL data.

Another comparison of 2008 with 2013 data shows the banks have preferred giving retail loans to only consumers with better credit record. CIBIL awards points to indicate the credit worthiness which has been taken as the parameter in the comparison. However, CIBIL has compared data related to 2008 and 2013 only and not for intervening years.

"Those having 700 points and above out of a total 900 are in the best category. Below 700 leads towards the doubtful to worse categories," said Harashala Chandorkar, senior vice-president of CIBIL. She was in the city to hold a meeting as a part of CIBIL's awareness drive.

            

In 2008, the loans granted to borrowers with a score over 800 were 26% of total retail lending. But in 2013, it went up to 62%. Those with a score between 750 to 799, made 57% of total borrowers in 2008 and it came down to 24.8% in 2013. At the same time, the worst category of less than 550 points formed 6.1% of the retail loans in 2008, which further came down to 2.5% in 2013.

A borrower can have access to his CIBIL score. Though repayment of loan in time is the only measure of awarding the points, the exact method of evaluation is not shared by CIBIL.
Visit- www.cibilconsultants.com
Source: Secondary

Cyber crime can be hold in by Hackers.

RANCHI: Identifying the potential of cyber threat in future warfare, a group of ethical hackers led by cyber buff and founder National Anti-hacking Group (NAG) Vineet Kumar in partnership with Jharkhand police, state Unicef and NGO Citizen foundation launched Cyber Peace Foundation here on Saturday.

The foundation aims at creating awareness about the potential risks involved in handling of internet and internet-based services among commoners and government organizations. With widespread awareness, the group expressed confidence about the introduction of suitable legislation and norms for regulations to safeguard vital installations.

S N Pradhan, additional director general, CID, Jharkhand police, who has been instrumental in the establishment of the country's first cyber defence research cell (CDRC) in the state said cyber space is a network that integrates government and private organisations as well as individuals throwing the system open to attacks and a concerted effort was necessary to counter attacks.

          

"Many countries have engaged thousands of hackers just to gate crash into vital information from government installations, which have no practical wall to be protected once they are working on the platform of internet communication," he said. Further, explaining the potential threat, Vineet said as part of a project taken up by CDRC Jharkhand, as many as one lakh computers, most of them being used by cyber cafes and private individuals were found to be afflicted with 'botnet', which is a term used in the cyber world for robotic hackers.

"Since the number of pirated software being used in Jharkhand is quite high, the vulnerability of the computers is also high and they could be easily compromised by hackers to attack on any vital installation within or outside the country," he said.

While the CDRC received huge number of complains related to credit and debit card fraud, impersonation on social networking sites and webcast of explicit material without consent, the cyber peace foundation expressed concern about bigger threats ahead. "Though we do not have evidence due to limitations of investigation conducted, experts of cyber world are almost confident that the historical failure of northern grid in July 2012 was masterminded by hackers who gained access to the control system," said Pradhan.

To begin with, the foundation has launched a cyber peace month for which a campaign vehicle was flagged off by Pradhan and state head, Jharkhand Unicef chief Job Zachariah, who joined the drive in consideration of children who fall prey to sexual offence emanating on the virtual platform. "The Prevention of Children from Sexual Offence Act, 2012 mentions punitive clause for exposing children to such contents on the internet and awareness is necessary for effective implementation of the act," he said.
To learn about Identity Theft, visit www.cibilconsultants.com
Source: Secondary

Low credit score can be fixed !

Credit health improvement firms handhold customers through each stage of their programmes till their credit health is enhanced

Almost a year ago, a customer was running from one bank to another, desperately looking for a mortgage loan. But his application was getting rejected by all banks, one after another. Then through some of his friends he came across a professional company that worked in areas of improving one’s credit health and he in fact signed up with this company. His credit score at that time was 623, forcing most private banks refusing to lend him. He then had to go to a known NBFC (non-banking financial company) for a loan and managed to get his loan done at the rate that was 1.5 per cent more than what private banks were offering.

Obviously that meant that he would have to shell out close to Rs 15 lakh over a period of 20 years. The professionals then worked on his credit health and got his score up to 815. Now he is going in for a loan with a MNC bank at a much lower rate.

The same company came across another customer, whose credit report had a delinquent account tagged, which he claimed was not his. He didn’t know about this and had applied for loan for his son’s education. He had already visited the bank and also the bureau to get it rectified but nothing happened. After trying all by himself for months, he had to sign up with a professional company, which in turn, helped him get this account off his credit report and now he is getting to send his son abroad for higher studies.

These two incidents will have to be seen in the wake of the fact that Credit Information Bureau (India) or Cibil, founded in August 2000, has now been playing a critical role in India’s financial system. Whether it is to help loan providers manage their business or help consumers secure credit faster and at better terms, the use of Cibil’s products have led to a massive change in the way the credit lifecycle is managed by both loan providers and consumers.

Cibil collects and maintains records of an individual‘s payments pertaining to loans and credit cards. These records are submitted to Cibil by banks and other lenders, on a monthly basis. This information is then used to create credit information reports (CIRs) and credit scores, which are then provided to lenders in order to help evaluate and approve loan applications. Credit score and CIR not only helps loan providers identify consumers who are likely to be able to pay back their loans, but also helps them to do this more quickly and economically.

This translates into faster loan approvals. Cibil officials said that the bureau works towards catalysing growth of credit in the country through solutions that enable well-informed credit decisions, technology that enables superior information availability and people that provide high quality services. The importance of an individual’s credit score or credit health can therefore be hardly over-emphasised.

Credit health is a state of complete financial well being. The absence of indebtedness merely does not necessarily mean being credit healthy. Optimum utilisation of the credit facilities to leverage yourself without falling into a debt trap is necessary for your social as well as emotional well being. Credit health has several components including a good track record, a good credit score, good income-expense ratio, absence of delinquency, healthy debt burdens loads, the ability to access credit on favourable terms and a host of other parameters that Cibil and other professional companies have researched over the years.

Credit score has relevance in almost every facet of life from loans, rates of interest on loans, telecom connections, jobs, rental markets through to insurance premia. People have now started checking credit health of their would be spouses before marrying and before renting out their flats / houses to future tenants.

An individual’s credit health is measured by a three-digit number on his bureau report. Higher the score, the better is his credit health. A score of 750 and above is considered good. A person’s credit history is a record of how he/she has used and managed credit in the past. Every financial transaction in one’s life involving credit is recorded in one’s credit history – from one’s payment history on one’s credit card, to one’s history on paying off one’s car loan, to any suits that may have been filed on him/her.

Professional counselors said that everybody makes mistakes. That’s why there is an eraser on every pencil. If an individual is willing to keep walking and walking down the right path, there is no reason why can’t one be shown the right path to enhance his credit, protect his credit and improve his credit health.

Unfortunately, there is limited awareness of the concepts of credit, credit health, credit scores, etc, among the general population. In fact, a recent survey revealed that 86 per cent respondents had not heard about any credit bureau and 92 per cent were unaware of their credit scores. Only 4 per cent had checked their credit scores in the last one year. That’s not all.

Almost 98 per cent respondents could not decipher a sample credit report when they were shown one and 91 per cent people who default on credit are unaware of any of the negative consequences of their actions. Overall, credit awareness and credit protection, according to the survey, are extremely low. But the good news is that as people become aware, they want to improve their scores/credit health.

As individuals approach professionals to bail them out in this regard, these professional counselors in their turn help people renew, revamp and retain their credit health. Their expertise lies in using a combination of analytical tools, a state of the art product suite and multi stage guidance to handhold you through the various stages of a credit life cycle and make you a credit healthy individual.

Various services offered by these trained counselors include: credit health improvement and tracking like compilation of reports from bureau, analysis of reports, error tracking and reconciliation and assistance in loan processing.

Credit health improvement companies offer unique programmes and guidance to assist one to avail loans, credit cards and other credit facilities on more favorable terms through enhanced credit health. To resolve a customer’s credit issue, companies first aims to interpret credit reports accurately. It follows it up with a process of identifying errors with the credit reports, if any, and then does a comprehensive analysis. In the final phase, these companies lay down a detailed roadmap for the customer to improve his or her credit health.

These companies also handholds customers through each stage of their customised programmes till their credit issues are resolved and credit health is enhanced.

The process of credit health improvement, of course, does not come free. Various packages are made available and the key features and charges vary according to the plan. These programmes will, over time, help customers to avail loans, credit cards and other credit facilities on more favorable terms through improved credit health.

The bottom line is credit score is a crucial indicator of an individual’s credit health. Most lenders use it for determining loan payment potential of an individual. Not just loans, but jobs, insurance premiums and so many other important things now depend on your credit score. It is therefore important to remove all discrepancies from your credit report to improve your credit health. Sensitising people about their credit behaviour and score always help them manage their finances well and improve their credit health.
opt for suitable credit health improvement packages available at www.cibilconsultants.com.

Source- secondary

Better Lending Rates if you have better credit score !

As per The Economic Times report more and more prospective loan borrowers are seeking their credit report from authorized agencies. The sentiment has prevailed as consumers are understanding the fact that a better credit history enables them to negotiate better loan rates with the lending institution. Also, the interest in getting the credit score on part of the prospective customer is said to have a direct co-relation with the penetration of banking in a partial area. Confirming the stance MD of Experian Credit Information of India was quoted in The Economic Times report saying "Consumer interest in going for credit scores is directly co-related to banking penetration in a particular geography."

Institutions rendering credit history report come up with the report and hence the creditworthiness of individuals with no prior borrowing record by analyzing and evaluating credit card transactions. Of late, such institutions suggested an increase in applicants from Tier-II cities who were keen on getting their credit score. Senior Vice-President Consumer Relations of CIBIL was quoted in one of the media reports saying " We have seen a significant increase in consumers reaching out for scores and reports in metros as well as tier-II and tier-III cities."

The product unveiled by Credit Information Bureau of India Ltd. (CIBIL) that assesses the credit history enables loan borrowers to negotiate lending rates with financial institutions. With improved financial awareness and levels of financial literacy in tier-II cities at par with the metros (as adjudged by the consumer eductaion programme of CIBIL) consumers are increasingly comprehending the importance of good credit history and related credit score in realizing better interest rates. And further augmentation of such awareness level is likely to beneficial for both the consumers and financial services industry in the near future as more and more prospective loan borrowers will work towards maintaining good credit history.

How does good credit history allows you to realize competitive lending rates?

As per the RBI, differential pricing mode should be opted by the bank and for it some financial institutions are giving due weightage to the credit score parameter for taking loan disbursal decisions. So, until late while for a good credit score you were provided with some of the Benefits such as waiver on processing charges, banks now allow you to negotiate on interest rates depending on your credit record.

So, good credit history and credit score fetches competitive interest rate for the loan borrower based on the negotiation capability of the borrower. Further, the extent of rebate could be 25 basis points that can enable an individual to save considerably over the years.

source-secondary