CIBIL CIR : Account and Negative Factors

In our earlier article Understanding CIBIL CIR report we explained CIBIL’s Credit Information report. Credit Information report and Credit score play a critical part in the loan granting process these days. Based on your credit score, a bank will decide whether to give you a loan or how much interest to charge you on the loan. It has information about the :

• Loans, credit card you have, called as Accounts, and
• The loans you applied for. called as Enquiries. Enquiries are made on your credit history when you apply to a lender for a loan. The lender accesses your Credit Report to assess your repayment capability.

‘Accounts’ section of your credit report contains existing and past credit facilities that you have availed from various loan providers. It shows details such as the name of the lender, type of credit facility, dates of opening and closing (if applicable) of each account, current balances, status of the accounts and your payment history. We shall cover Accounts section in detail in this article and also what negative factors affect your CIR report .

As mentioned earlier The ‘Accounts’ section of your credit report contains existing and past credit facilities that you have availed from various loan providers. For example, if you have a home loan and a personal loan, your credit report will reflect both accounts on your credit report along with details such as the name of the lender, type of credit facility, dates of opening and closing (if applicable) of each account, current balances, status of the accounts and your payment history. Your credit report summarizes your credit behavior across these accounts for the last 36 months.

Note: Only credit facilities get reported on CIR such as home loan, auto loan, personal loans, credit cards,loans against shares etc. None of your assets, such as saving account, fixed deposit, mutual funds etc, are reported.

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) will remain on your report for 7 years from the date the account was last reported.

Account Details

Here you will find the details of the Loan / credit card taken by you as shown in picture below:

• Member Name: The name and details of the lender, from whom you have taken loan or credit card.
• Account Number: The account number of the loan.
• Account Type: Type of the Account such as home loan, auto loan, personal loan, credit card.
• Ownership: The Ownership indicator tells the Loan provider who is responsible for payments on that credit facility. There are 4 types of indicators that can appear on your CIBIL credit report:

• Single or Individual: You are solely responsible for making payments on the account.
• Joint: You and someone else bear joint responsibility for payments on these accounts. It is important to check your credit report periodically, because late dues on a Joint account are likely to affect your loan application, even if you are not the one paying off the loan.
• Authorized User: This is used for add-on credit cards. It implies that you have an access to credit, but are not responsible for paying dues on that particular account.
• Guarantor: A guarantor pledges to repay a loan on behalf of a third party who has taken a loan. Hence, he provides a guarantee to the loan provider, that he will honour the obligation, in case the principal applicant is unable to do so.

Dates

This section gives the time lines about your loan account. There are four main parameters in this section.Format for the dates is DD-MM-YYY.

• Date Opened: The date on which you loan, credit card was opened.
• Date of Last Payment: The date on which the last payment was made.
• Date Closed: The date of closure.
• Date Reported and Certified: The date on which CIBIL was reported about this account.

If you find a date adjacent to the ‘Closed’ field in the account section of your CIBIL credit report, this means that that loan account has been closed by the loan provider. In other words, it means you have paid off your loan. However, if you have not been able to pay off your dues in full, your account could still be marked ‘Closed’. In such cases, you may see the ‘Status’ section populated (Written-off or Settled), which is viewed negatively by loan providers.

If no date is populated in the ‘Closed’ field, it implies that your account is still open. This can be harmful to your loan application, if you have taken many loans over the years. Now, why is this harmful? Well, if many loan accounts are perceived to be open, the loan provider is likely to think that you already have large monthly outflows in terms of EMIs. This can negatively impact your loan application.

Account Information

It gives details about the loan/credit card taken. The entries filled in the section depends on type of loan i.e loan or credit card, whether it’s open/closed.

• Credit Card: For credit cards it shows:

• Credit Limit: It reflects the total amount of credit you have access to with regard to the credit card .
• High Credit: It reflects the highest amount ever billed (including interest and fees) for that particular credit card. It denotes the highest credit utilized in a single month over the life of that credit card. For example, if 3 years ago I spent Rs. 75,000 on some emergency medical treatment on my credit card (which has a credit limit of Rs. 1,00,000). Given, that was the single highest monthly balance in the history of my credit card usage, this is what gets reflected in my credit report.
• Current Balance: It is the amount you still owe on a particular credit facility. Note: that lenders typically take 30 to 45 days after your payment is received to update this information with CIBIL. Consider this fact before raising any disputes.
• Cash Limit: It is the amount of cash you are permitted to withdraw from your credit card. This cash limit specifically applies to the credit cards only.
• Amount Overdue: this indicates the total amount that has not been paid to the lender in a timely fashion (it includes principal and interest amount).

Open Loans: For Loans which are open i.e you are paying EMI

• Rate of Interest: The rate of interest applicable on your loan facility.
• Repayment Tenure: It is the term of your loan. This field is to be read with the payment frequency field in order to accurately understand the term of the loan. For example, a value of 120 in this field at a monthly payment frequency would mean the term of the loan is 10 years.
• EMI Amount: Equated Monthly Installment – the monthly payment required to be paid by you for servicing the loan.
• Payment Frequency: The frequency by which you are required to make the payments for servicing the loan.
• Actual Payment Amount: It is the amount you have paid to your lender if it is different from the EMI amount. It can be more or less than the EMI amount.
• Sanctioned Amount: This is the amount disbursed to you.
• Current Balance : It shows the how much outstanding you have on any loans you have taken i.e how much debt you still owe. So if you took a car loan and have paid off most of it and only have say Rs. 50,000 left, then Rs. 50,000 will reflect here, for your car loan.
• Amount Overdue: this indicates the total amount that has not been paid to the lender in a timely fashion (it includes principal and interest amount).

Closed loans : loans which have been closed i.e you have paid off your loan. However, if you have not been able to pay off your dues in full, your account could still be marked ‘Closed’. In such cases, you may see the ‘Status’ section populated (Written-off or Settled), which is viewed negatively by loan providers.

• Sanctioned Amount: This is the amount disbursed to you.

Collateral

It is the security which you provide to the lender in the form of property, stock, gold, fixed deposits. By liquidating this collateral security, the lender might recover the amount due towards you in case you are unable to repay your loan.

• Value of Collateral: The notional value of the security pledged by you.
• Type of Collateral: The type of security provided by you for securing the loan.

Status

This section provides information about the status of your loan account. Following entries may appear in this section.

• Suit Filed / Wilful Default: In case the lender has filed a suit against you, there is a specific reporting prescribed by RBI. This is as follows.

• No Suit (or the field will be blank)
• Suit Filed
• Wilful Default
• Suit Filed (Wilful Default)

Written-off and Settled Status: If this section is populated, the lender has either restructured the loan by offering you different terms, written of this amount or settled at some amount less than what the lender believes it was owed. The possible values are as follows:

• Restructured loan
• Restructured loan (Government Mandated)
• Written off (WO)
• Settled
• Post (WO) Settled

Written-off Amount (Total): When a loan is written off there is an interest and principal component. This field reflects the total interest and principal amount written off.

Written-Off Amount (Principal): This is the principal part of the amount written-off.

Settlement Amount: When an amount owed on a loan account is disputed, the individual and lender settle at some amount in between. It’s what the lender believes is owed and what the individual believes he should pay. This is the amount the individual has agreed to pay. The rest of the amount is written off by the lender.

Given that a CIBIL credit report helps a loan provider ascertain your ability to pay additional debt based on your past performance, a ‘’written off’ or ‘’settled’’ account implies that you have not been able to pay your past dues. Hence, Loan providers may view accounts that are reported as ‘’written off’ or ‘’settled’’ negatively and this may affect your chances of a loan approval.

Payment History

It tells the prospective lender about the regularity and promptness with which you discharge your payment obligations. Up to 36 months of this payment history (with the most recent month displayed first) are provided in this section. It consists of two parts:

• DPD or Days Past Due/ AC or Asset Classification
• month and year of payment

DPD or Days Past Due: indicates how many days a payment on that account is late that month. For example, if you have taken a loan whose payments started in Aug 2010 and are 3 months late on a payment due at the end of Sept 2010, your DPD may be reflected as follows:

DPD	090	060	030	000	000
Month/Year	12-10	11-10	10-10	09-10	08-10

 AC or Asset Classification:The Asset classification norms defined by RBI are as follows:

• STD (Standard): This implies that payments are being made within 90 days. Any account overdue by more than 90 days is classified as as non-performing asset (NPA) by banks.
• SMA (Special Mention Account): Special account created for reporting standard account, moving towards substandard. This indicates that your credit history is less trustworthy as compared to STD.
• SUB (Sub-standard): An account which has remained an NPA for up to 12 months.
• DBT (Doubtful): an account that has remained substandard for a period of 12 months. This is indicative of very low credit worthiness.
• LSS (Loss): an account where loss has been identified and remains un-collectible. This indicates almost zero credit worthiness.

On occasion you may see “XXX” reported for your DPD on a certain account. This means that the Loan provider has not reported that month’s DPD to CIBIL and hence, there’s no need to worry.

Negative factors affecting CIBIL report

“Written Off” or “Settled” Given that a CIBIL credit report helps a loan provider ascertain your ability to pay additional debt based on your past performance, a ‘’written off’ or ‘’settled’’ account implies that you have not been able to pay your past dues. Hence, Loan providers may view accounts that are reported as ‘’written off’ or ‘’settled’’ negatively and this may affect your chances of a loan approval.

DPD or Days Past Due: Given that your credit history helps a Loan provider ascertain your ability to pay additional debt based on your past performance, having DPD other than “000” on your CIBIL credit report would imply that you have not met your financial obligations in the past. Pay your bills on time and avoid taking on excessive debt.

Many Accounts:If many loan accounts are perceived to be open, the loan provider is likely to think that you already have large monthly outflows in terms of EMIs.

Many Enquiries: If you have applied for a number of loans in the recent past, the chances of your loan getting approved are likely to suffer. Simply because, this credit behaviour indicates that you are “Credit Hungry” and in an urgent need of money. It is likely to make Loan providers more cautious while evaluating your credit application.

Cosigned,Joint Accounts:  In co-signed or jointly held accounts, you are held equally liable for missed payments. Your joint holder’s negligence could affect your ability to access credit when you need it. So Monitor your co-signed and joint accounts .

Number of credit cards :Your credit history should contain a mix of a home loan, auto loan and a couple of credit cards. A high number of just credit cards may affect the chances of a loan approval. As a credit card offers easy access to finance, it’s also by far the most expensive form of credit. More the number of credit cards with high utilization, larger are the payments resulting from its high rate of interest.

Utilization: You should control your utilization. For example, if you have used Rs. 90,000 out of a credit limit of Rs. 1,00,000, this may be viewed negatively by a Loan provider. It’s always prudent to not use too much credit.

Related Articles :

• Understanding CIBIL CIR report
• FAQ regarding CIR report
• Understanding Loans
• Life of Debt – Responsibly