" You can directly access your credit report by March".

Arun Thukral, Managing Director, Credit Information Bureau (India) Ltd (Cibil), talks to Sushmita Choudhury about the importance &limitations of credit information reports

1. When will individuals be able to access their credit scores?

CIBIL is currently developing the infrastructure, systems and processes that will give individuals direct access to their credit information reports from CIBIL. It should be in place by the end of this financial year. To begin with, we will be offering Credit Information Reports ( CIR's) to individuals.

2. Has CIBIL worked out a fee structure for such requests?

Credit Information Companies ( Regulations) Act, 2005, has prescribed the maximum fees that can be charged to an individual for his/ her credit information report as Rs 100.

3. Now that RBI has directed banks to issue credit reports to customers upon request, what is the incentive for customers to come to Cibil directly? Will this move help in making things more transparent?

Customers can get their reports from the credit institutions only if they have applied for credit from that institution. On the other hand, the CICR Act now allows customers to access their reports directly from CIBIL whenever they want. This is advantageous for both consumers and credit grantors on two counts. Firstly, the CIBIL report that credit institutions access is tailored for them. But an individual will need to see a report which can be more easily understood and is consumer- friendly.

Also, consumers will be able to approach CIBIL through multiple touch points including phone and email and we will have a dedicated customer service centre to answer customer queries. This move will certainly have a very positive impact on the financial sector by improving transparency and creating awareness and accountability on both the lender and the borrower's front.

Once borrowers gain access to their credit information reports, they will be able to understand its relevance and impact better.

They will understand the need for increased caution and sensitivity towards repayment of dues.

The CICR Act enables transparent and active information sharing and thereby boosts a sound credit culture that should translate into economic growth.

4. How often does Cibil update the CIRs? How long will it take a borrower to mend his credit history?

Our members submit data to us on a monthly basis. The updates consist of any changes in the borrower payment behaviour, be it negative or positive information. Once they submit the data to us, we process the data, do our data quality checks and then upload the same to the database.

The CICR Act gives a time frame of 30 days to the credit information company and the credit grantors for the handling of errors in a borrower's credit report.

It is important to note that CIBIL does not make changes to any information on its own.

It is only a custodian of information received from credit institutions. CIBIL is permitted to make changes to a borrower's credit information only when it is confirmed by the credit institution( s).

5. If an individual feels that the CIR does not present a true picture of his credit history, how can he get the information rectified?

The applicant can contact the concerned credit grantor to have the information rectified.

The applicant should follow the following process for rectification of their credit information.

Step 1: Write to info@ cibil. com with the identification details and the Enquiry Control Number ( a nine digit number which identifies the Credit Information Report).

On the basis of this information, the CIBIL team will communicate the name of the reporting credit grantor for that particular information to the borrower.

Step 2: Contact the related credit grantor( s) immediately and inform them of the error by providing them with the necessary proof of having cleared the dues.

Step 3: Once the error, if any, is validated by the credit grantor( s), they will re- submit the updated information to CIBIL.

Step 4: Approach the credit institution from where he/ she is seeking credit to reconsider his/ her application. The CIBIL Credit Information Report will now reflect the rectified status.

6. A credit score in a sense is an indication of the creditworthiness of an individual.

However, some payment defaults may happen without the fault of the borrower. In some cases, there may be a dispute between a bank and an individual on the charges levied on some credit card and the bank might go ahead and list him as a defaulter.

Does CIBIL also consider the reasons for default when evaluating the credit score?

CIBIL does not classify any borrower/ consumer as a defaulter or otherwise. CIBIL maintains factual information on borrowersconsisting of both positive and negative data, and provides this information to its members in the form of risk management tools like CBIL Credit Information Reports, CIBIL Portfolio Review reports, CIBIL TransUnion Score etc. CIBIL does not pass any value judgments and it is up to the credit grantor to sanction a loan or credit.

The CIBIL TransUnion score takes a " snapshot" of the consumer's CIBIL Credit Information Report and through advanced analytics turns the information into a 3- digit number representing the amount of risk a consumer brings to a particular transaction. The score takes into account only factual information like the overdue amount, age of satisfactory trade, etc. The score is a dynamic number and gets updated as and when any change is made to borrower information.

7. According to CIBIL's data ( presented by the finance ministry in Parliament), the number of people who borrowed Rs 1 crore and above and willfully defaulted ( at 5,422 till March 2008) far exceeds those who borrowed between Rs 25 lakh and Rs 1 crore ( 2,786 people).

Does the amount of borrowing, and therefore the default, also have an impact on the score?

The CIBIL TransUnion scoring model uses various attributes based on the credit behaviour information for determining the credit score. And while many of them are proprietary in nature, the majority of the score is made up of the following elements:

Credit utilisation: how much credit is the consumer using?

Defaulting: how many accounts are past due -- by how many days and by how much?

Number of inquiries: has this consumer applied for additional credit lines?

Trade Attributes: How old are this consumer's lines of credit? What type of credit does he have? Does the consumer have a good mix of credit or is it all credit cards, for example?

8. The CIR does not contain income details, deposits, borrowers' assets and investments.

Is there a case to look at these when arriving at the credit score as a borrower's assets have a bearing on his ability to repay?

CIBIL only provides credit information on borrowers based on the data that's made available to it by its member banks and financial institutions.

CIR gives the lending institution a factual snapshot of the applicant's credit history and payment records. It is important to note that the CIBIL CIR and CIBIL TransUnion Score are important inputs in a lender's credit decisioning process but not the only ones. Each lender based on its individual credit policy uses CIBIL tools in conjunction with other factors like details on borrower's income, occupation, networth etc.

9. As a CIR is just based on factual information, is there some decision making involved at the bank level? For example, if one bank denies credit, can another bank take a different view?

Every credit institution has its own level of risk appetite related to granting credit, which is based on their credit and risk management policies. CIR is used as a part of the due diligence procedure by the banks. With reference to a particular CIR, different credit grantors can take different views, and use the information in their decision- making differently.

They would also take into account factors other than the CIR before arriving at a decision, when they assess an application.

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