What is CIBIL?

CIBIL - India's first Credit Information Bureau- is a repository of information, which contains the credit history of commercial and consumer borrowers. CIBIL provides this information to its Members in the form of credit information reports.
The establishment of CIBIL is an effort made by the Government of India and the Reserve Bank of India to improve the functionality and stability of the Indian financial system by containing NPAs while improving credit grantors’ portfolio quality. CIBIL provides a vital service, which allows its Members to make informed, objective and faster credit decisions.

CIBIL's aim is to fulfill the need of credit granting institutions for comprehensive credit information by collecting, collating and disseminating credit information pertaining to both commercial and consumer borrowers, to a closed user group of Members. Banks, Financial Institutions, Non Banking Financial Companies, Housing Finance Companies and Credit Card Companies use CIBIL’s services. Data sharing is based on the Principle of Reciprocity, which means that only Members who have submitted all their credit data, may access Credit Information Reports from CIBIL. The relationship between CIBIL and its members is that of close interdependence.

Credit Bureau

Credit bureaus collect and collate personal financial data on individuals and businesses from data furnishers with which the bureaus have a relationship. Data furnishers are businesses, utilities, debt collection agencies, public institutions, and the courts (i.e. public records) that a consumer or business has had a relationship or experience with. Data furnishers report the experience with the consumer or business to the credit bureaus. The data provided by the data furnishers as well as collected by the bureaus are then aggregated into the credit bureaus data repository or files. The resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring. Given the large number of consumer borrowers, these credit scores tend to be mechanistic. In other words, the different credit bureaus collect data from a variety of sources and then apply a mathematical algorithm to assess the likelihood that an individual will repay a given debt given the frequency that other individuals in similar situations have defaulted. Most consumer welfare advocates advise individuals to review their credit reports at least once per year, in order to ensure that the reports are accurate.

CIR - Credit Information Report

CIBIL primarily gets data from its Members (Banking/Non-banking Credit Grantors) only and at a subsequent stage will supplement it with public domain information in order to create a truly comprehensive snapshot of an entity’s financial track record.

CIBIL keeps credit database(history/information report) of both commercial and consumer segments.

According to Cibil.com, The CIR includes the following information:

  • Basic borrower information like:
    Name
    AddressIn case of individuals:
    Identification numbers
    Passport ID
    Voters ID
    DateofBirth In case of non-individuals
    D-U-N-S® Number
    Registration Number Legal Constitution
  • Records of all the credit facilities availed by the borrower
  • Past payment history
  • Amount overdue
  • Number of inquiries made on that borrower, by different Members
  • Suit-filed status.

source: cibil.com

What is the interest rate on this mortgage?

To determine exactly what you'll pay over the term of the loan, you need to know the rate. Rates change quickly, and if your credit is less than perfect, you may not be offered the lender's lowest figure.
To effectively compare different lenders' programs, ask for the annual percentage rate (APR) of the mortgage interest, which is generally higher than the initial quoted rate because it includes some fees. But beware: the APR found in advertisements can be misleading. Mortgage lenders don't always include all the fees they charge in the calculation that determines APR, so customers who use that figure to shop rather than an itemized breakdown of rates, points and fees may end up comparing apples to oranges.

How many discount and origination points will I pay?

Lenders may charge prepaid mortgage interest points to lower your interest rate or other points that have no benefit to you at all. Find out how many you'll be expected to pay and which kind of points they will be.

What are the closing costs?

Mortgages come with fees for various services provided by lenders and other parties involved in the transaction. You want to know what those fees will be as early as possible. Lenders are required to provide a written good faith estimate of closing costs within three days of receiving a loan application.

When can I lock the interest rate and what will it cost me to do so?

Your interest rate might fluctuate between the time you apply and closing. To prevent it from going up, you may want to lock the rate, and even points, for a specified period. Ask your lender if lock fees apply. Also, find out what the experts are expecting rates to do, read Rate Trend Index.

Is there a prepayment penalty on this loan?

There may be a prepayment penalty on your loan. Some penalties are 1 percent of the loan amount, others are equal to six months' interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated. Some lenders offer lower interest rates to buyers who accept prepayment penalties.

What is the minimum down payment required for this loan?

The rate and terms of your loan will be based on a down payment figure, typically 3 to 20 percent of the buy price. If you can put more money down, you may be able to lower your rate and improve your terms; if you come up short, you may be required to get mortgage insurance.

What are the qualifying guidelines for this loan?

These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.

What documents will I have to provide?

Most lenders will require proof of income and assets before approving your loan, and may require other documents as well. Buyers with excellent credit may qualify for a no-documentation or "no-doc" loan, but they can expect to pay a hefty down payment and higher interest rate.

How long will it take to process my loan application?

The answer will depend on a number of variables. When the loan business is brisk, underwriters get backed up, verification takes longer, appraisals move slower and other bottlenecks develop along the loan pipeline. Lenders may say two weeks, but 45 to 60 days is probably more realistic in most cases. You'll need their best guess to determine how long to lock in your loan.

What might delay approval of my loan?

If you provide the lender with complete, accurate information, the loan process should run smoothly. If the underwriter discovers credit problems, however, there could be delays. Make sure you notify your lender if you change jobs, increase or decrease your salary, incur additional debt or change marital status between the time you submit an application and the time the loan is funded.

Access To CIBIL Database

Who can access CIRs?

Reports can be accessed by Members on the principle of reciprocity ie only those Members who have provided all their data to CIBIL are permitted to access CIRs. Members can do so only to take valid credit decisions. Disclosure to any other person or entity is prohibited.

Can the borrower obtain his own CIR from CIBIL?

No. However, if a Member has drawn a report on that borrower, a copy of the same can be obtained from the Member.

Can CIBIL provide CIRs to credit providers in other countries?

No. CIBIL will provide credit information reports only to it's Members in India.

Whether Right to Information Act, 2005 is applicable to CIBIL?

No. The reason being that the CIBIL is not a “Public Authority” as defined under Sec 2(h) of the Right to Information Act, 2005.

source:cibil.com

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