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Mohan Jayaraman MD, Experian Credit Information Company
Loans and credit cards enable us to access financing to fulfil our wishes. They also help us tide over difficult times. However, the rejection of a loan or a credit card application leaves us disappointed and confused. Here is how our imaginary friend Vilas handled a situation of a credit application rejection.
Understanding the Credit application process
Vilas had been a frequent borrower from the banking system through his personal loans and credit cards and had applied for a personal loan for renovating his home.
However, to his shock and dismay, his loan application was rejected. Though disappointed, he was keen to understand the reason for this rejection and ensure that he found the best way of addressing the situation. He started with trying to understand the credit application process in a bank.
He understood that when you apply for a loan, banks have to make sure that you are who you say you are and that you are capable of repaying the loan. They will look at the information in your application and will check your credit information report (CIR) from a credit information company (CIC) such as Experian.
A CIC is an independent organisation that compiles identity information, credit transactions and payment histories of consumers from banks, NBFCs and financial institutions.
The Experian Credit Information Report contains identity information, past and present credit obligations, previous addresses and enquiries made by banks for all your loan applications.
If your report shows that you repay credit on time, this will help the credit institution in the credit decisioning process of your loan or credit card application. The information in the credit information report is summarised by the credit information company in a bureau score.
Lenders use the bureau score and/or the credit information report as a part of their credit approval process to decide if you will be able to pay back the money you want to borrow. Each lender has its own credit policy for determining whom it will extend loans and credit cards to.
Taking Control
Once Vilas understood the process he reached out to the bank to understand the reason for the rejection of his credit application. He came to know that a bank would have to give you the reason why it has rejected your loan application and that this was the logical first step in understanding and addressing the problem.
The bank told him that they refused his application because of his credit score, which was affected by the information on his Experian Credit Information report. Vilas then did the right thing by applying for his Experian CIR.
Don't pay for advice which comes free
Vilas got his credit information report and contacted the Experian consumer support team to understand the information on his report, how it is used and how he can change or add to information if necessary. The consumer support team helped him understand the situation of his credit track record and loans that were pending repayment.
Another thing Vilas did was to not turn to the so-called credit repair companies. These companies claim to be able to get rid of negative information from your CIR for a fee. They will charge you for doing something that you can do yourself for free by contacting the credit information company directly or with the help of a credit counsellor.
Vilas then approached a credit counselling agency which gave free advice and helped him find the best way to sort out his existing loans and credit card dues. He thus avoided the trap of credit repair companies, which will fail to repair the credit and, in fact, make matters worse.
With the advice from the credit counselling agency, Vilas got his finances in order and was soon able to approach banks for a loan which was now approved. Vilas now has a good credit history and hence can now have better access to loans and credit cards in the future.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mohan Jayaraman MD, Experian Credit Information Company
Loans and credit cards enable us to access financing to fulfil our wishes. They also help us tide over difficult times. However, the rejection of a loan or a credit card application leaves us disappointed and confused. Here is how our imaginary friend Vilas handled a situation of a credit application rejection.
Understanding the Credit application process
Vilas had been a frequent borrower from the banking system through his personal loans and credit cards and had applied for a personal loan for renovating his home.
However, to his shock and dismay, his loan application was rejected. Though disappointed, he was keen to understand the reason for this rejection and ensure that he found the best way of addressing the situation. He started with trying to understand the credit application process in a bank.
He understood that when you apply for a loan, banks have to make sure that you are who you say you are and that you are capable of repaying the loan. They will look at the information in your application and will check your credit information report (CIR) from a credit information company (CIC) such as Experian.
A CIC is an independent organisation that compiles identity information, credit transactions and payment histories of consumers from banks, NBFCs and financial institutions.
The Experian Credit Information Report contains identity information, past and present credit obligations, previous addresses and enquiries made by banks for all your loan applications.
If your report shows that you repay credit on time, this will help the credit institution in the credit decisioning process of your loan or credit card application. The information in the credit information report is summarised by the credit information company in a bureau score.
Lenders use the bureau score and/or the credit information report as a part of their credit approval process to decide if you will be able to pay back the money you want to borrow. Each lender has its own credit policy for determining whom it will extend loans and credit cards to.
Taking Control
Once Vilas understood the process he reached out to the bank to understand the reason for the rejection of his credit application. He came to know that a bank would have to give you the reason why it has rejected your loan application and that this was the logical first step in understanding and addressing the problem.
The bank told him that they refused his application because of his credit score, which was affected by the information on his Experian Credit Information report. Vilas then did the right thing by applying for his Experian CIR.
Don't pay for advice which comes free
Vilas got his credit information report and contacted the Experian consumer support team to understand the information on his report, how it is used and how he can change or add to information if necessary. The consumer support team helped him understand the situation of his credit track record and loans that were pending repayment.
Another thing Vilas did was to not turn to the so-called credit repair companies. These companies claim to be able to get rid of negative information from your CIR for a fee. They will charge you for doing something that you can do yourself for free by contacting the credit information company directly or with the help of a credit counsellor.
Vilas then approached a credit counselling agency which gave free advice and helped him find the best way to sort out his existing loans and credit card dues. He thus avoided the trap of credit repair companies, which will fail to repair the credit and, in fact, make matters worse.
With the advice from the credit counselling agency, Vilas got his finances in order and was soon able to approach banks for a loan which was now approved. Vilas now has a good credit history and hence can now have better access to loans and credit cards in the future.
