Today, its is seen that every other person uses credit card for their daily usage eg: shopping for grocery, for petrol or for things which he knows he would be able to pay by next month . This comes in very handy when you can divide you expenses month wise. You know that you can always pay the minimum on your credit card bill and pay the rest by next month , the only problem is you will have to pay interest on your reducing balance eg HDFC charges 3.25% per month and 39 % annually. So, you can imagine how expensive it is when you try to divide your o/s credit card bill.
People may still be OK with the credit card charges when they have to bare it for only 2 or 3 months.
But, have you ever wondered what would happen if you default on few payments? How much impact can this have on your future or you may ask does it even have any impact? You can imagine similar situation, when you borrow money from your friend and family and forget to repay, they tend to loose faith in you and will not give you a single penny until you can prove you have improved or someone who can assure others you will be able to pay their money.
In the above example, we have used friends and family but who is the big brother who watches in the banking world? Who keeps a tab on our credit history? If you ask a common man he would say the respective bank keeps a track. or he may simply say “don’t know”.
The Big Brother or the big boss who watches all our credit history and repayment history is none other than Credit Information Bureau (India) Limited, also known as CIBIL. It is a repository of information that contains history of all the borrowers as it generates credit report of all borrowers. The report keeps a tab of our repayment history, settlement , defaults, contact details and the important point over here is that this information is shared between all banks. So, if you forget to pay and if the trend continues then be very sure you are in trouble, big time.
Anyone who borrows money from the bank gets automatically listed under CIBIL and all the defaulters gets punished in a very badly. They are blacklisted for next 7 years. When I heard it for the first time, I said, “Are they nuts?”. But, what can you do, rules are rules. It seems a bit unfair that you have to wait 7 years before you can borrow money from any bank. This may affect your dreams when you want to buy a house or car or go for your vacation.
One may ask , can I clear my name under CIBIL? Yes, but the fresh loan that you may get may not be at the current market rate but much higher. To get fresh loan the person must follow the steps below:
1) Clear old dues.
2) Create a fresh history through fully secured debts.
3) Inform the bank to rectify the status.
4)To get faster resolution send a mail to CIBIL with the credit report.
The database gets update every 45-60 days that way the person will get a fresh loan but at a very costly price.
One must always try to pay of their credit dues on time to avoid complications or the mistake may prove every painful.
