Do you know what is a defaulter’s list when it comes to banks? Are you aware of what is the credit score and how it can impact your profile? In this post, I will give you a brief idea about defaulter list and credit score.
When you take a loan from a bank or a credit institution, the bank has to report your repayment performance to the Credit Information Companies.
This report includes your performance on repayment of loans as well as credit card dues. It addresses every detail of your repayment, inclusive of your prompt payments as well as defaulted payments. It is important to make timely payments of your credit card dues and loan repayments to maintain a decent credit score.
It might happen that sometimes, you would not be able to make timely payments. But when too many defaulted payments are reported under your name, it can cause a substantial negative impact your credit score or credit rating. Bad credit score and history are among the most significant reasons why many people are denied loans or credit cards.
People are often clueless about the procedure of getting their names removed from the defaulters’ list or why it is there in the first place. I would throw light on this procedure in a separate blog post.
The four major credit bureaus in India are CIBIL, Equifax, CRIF High Mark, and Experian. CIBIL (Credit Information Bureau of India Limited) possesses the credit information as well as the credit history of every borrower associated with the member banks or NBFCs.
When the NBFC or a bank is approached for a loan, they collect your credit information report to analyze your creditworthiness based on your credit history. And based on their judgment of your creditworthiness, the bank and NBFC’s decide whether they should provide the loan to you.
I hope this post provided some insight about the defaulter list and credit score. If you wish to read up about how to plan and opt for a suitable business insurance, you can read that here.