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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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My Barber and CIBIL

Posted by Muthu on September 5, 2012

I started writing this piece some time last year and left it in mid way. Some time I write 3 pages and simply discard it. I share with you only what I feel appropriate.

The widely covered Anna Hazare’s fast by the media 24/7 happened last year. The location for fasting in Chennai was L.B.Road; the road where I live.

I went to the fasting location just to see what is happening there.

There were around 40 people fasting with 50 media personnel covering the same and another 50+ curious onlooker like me.

I was dumb stuck to see my barber there signing for implementation of Jan Lokpal bill. I saw his other barber friends, near by shop owners etc. happily signing for the Jan Lokpal. I smelt a rat. 

I know my barber for the last so many years. I visit him once a week. Right from head massage to hair wash to nail cutting; he takes completely care of me, with my wife complaining that I being pampered like a king. 

He is very truthful. Once I appeared in a TV talk show for an hour. Since TV keeps running in the shop through out the day; I suggested he seeing the program. I visited him next week and asked his feedback. He told me that he watched the program for few minutes, told the customers over there that I’m his client and changed to a film music channel. When I asked him why he didn’t see fully, he matter of factly replied that it is very boring to hear me talking on TV too:-) 

He rarely gets angry and he never fights anything, leave alone corruption. 

I’ve seen him getting angry only once. Another customer of him who works in a private insurance company sold him a ULIP telling that by paying 30K every year for 3 years; he would get back 2L at the end of 3’rd year. 

He visited the insurance company to find out the value at the end of 3 years. It was much lesser than the premium paid by him. He fought with the customer and with his branch manager too. He cursed that the company would come to road and told his customer that if he ever sees him in the shop again, he would cut both his ears. 

I visited his shop few days after seeing him in the fasting avenue. I asked him what he knows about Jan Lokpal bill and why he signed for it. He cited two reasons for coming there. There are good looking girls at the venue. Some one informed him of the same. Being a young bachelor, he got excited. He was stunned when they spoke to him in Tamil explaining him about the fasting. This is the first time that not only good looking girls spoke to him but also in Tamil instead of English. When he asked them whether they are against Sibal, they said that not only Sibal they are against all the other ministers as well. 

I got confused. What a barber in Adyar can have against Kapil Sibal?

 A small flash back:

As he has been servicing debts from private lenders at an interest rate of 60% per annum, I suggested him to approach banks first through his known contacts. Since no bank was willing to give loan, I suggested that he approach a chit fund for loan. Despite providing five sureties, the loan was not being processed.

When he went and asked the chit fund, they mentioned that based on CIBIL’s report the loan has been rejected.

This is the second time he got angry. This time against CIBIL. He asked a customer as to who CIBIL is? The customer happily informed that he is a minister in the central government. 

Now I understood how similar sounding CIBIL and Sibal got mixed up. 

When he told me this, I started wondering how a person without credit history can have issue with credit score. When I probed further, to my surprise I found that a private bank (‘easy easy bank’) which once used to issue credit cards like templeprasadam has given him one too. He has long ago reached his credit limit and is only paying minimum amount due, which is rising every month. 

Then I explained him about CIBIL and credit score and thought that I should write about this as it affects all of us. Last week,, when I met a client, whose bank is warning that his case would be reported to CIBIL (in this case the client is not at fault but the bank is, which it refuses to acknowledge) and as he wanted to know more on the same; I made up my mind to share some inputs about CIBIL and credit score.

Credit Information Bureau (India) Ltd. (CIBIL) is the country’s first and premier credit bureau. They act as a  central repository of credit information pertaining to more than 200 million people of our country. This number is only growing.

CIBIL has more than 500 members from financial services – banks, private and public lending institutions as clients and members.

The credit score given by CIBIL is known as ‘CIBIL Trans Union Score’. It ranges between 300 to 900. The score is considered better if it is closer to 900, atleast more than 800. If the score is less than 700, it is very difficult to get a loan from a reputed financial institution.

The score is based on an algorithm based on the credit history of the consumer. For someone to have a credit score in first place, there should be a minimum 6 month history. There are 258 variables that influence one’s credit score.

You can get a loan, preferred rate etc. only based on your credit score. The following are normally the reasons for getting a bad credit score: 

1)     If you are ‘credit hungry’. Applying for too many loans, having too many credit cards, unused credit cards (as it still considered an indebtedness), having multiple kind of credits, too many enquiries too financial institutions about loans they offer etc. are considered as a bad sign. 

2)     If you’ve guaranteed a loan or signed as a surety, if the original debtor does not pay or pay irregularly, it would have huge negative impact on credit score. 

3)     If you’re always late in paying your credit card bills, roll over the payment quite often, keep doing balance transfers frequently, it is considered a negative trait. If there is a dispute in the loan or credit card statement, one should protest on record and pay. Many do not pay an incorrect statement which would be termed as default and impact the credit score. If you can prove the incorrectness of the statement, the refund automatically happens. 

4)     If you have a high share of unsecured loan (personal loan, credit card etc.), it is considered negative. Secured loans like home loan, car loan etc., if with in the reasonable levels, do not have an adverse impact. 

5)     If there is an incorrect information in the CIR (Credit information report) and if you do not rectify the same, it would have a negative impact. 

6)     Like Western countries, going forward, non payment or delayed payment of utilities like telephone bill also would impact the credit score. 

In future, for employment in certain money sensitive sectors- Banks, Insurance, Mutual Funds, Capital Market etc, a good credit score may become a basic hygiene factor. 

To know your credit score and also get your credit information report, please click https://www.cibil.com/online/credit-score-check.do   You would be emailed the details for a payment of Rs.470/- (Rupees Four Hundred and Seventy only).  

It would send you the detail only after due verification. Before clicking the link, have ready with you- Voter’s ID, PAN Card, Passport, Credit cards, Bank Account numbers and the mobile phone numbers you would have used during last 10 years. If the details are not properly validated, then you would be able to get the report only offline. The details are available in www.cibil.com 

Your CIR would also show who (financial institutions) all have asked for your credit history till date. 

The scores obtained for me and my wife shows we have very good credit history. One can always have a good credit by not using the credit:-) 

Even after explaining the above, my barber is not willing to close his credit card loan of ‘Easy Easy’ bank. He says for all his friends, who have paid their dues; the bank has cancelled the cards subsequently. So he is willing to pay high interest for the purpose of retaining the card. Who said we are all rational? 

After 2008, the above bank has woken up and cancelled lot cards. They have fine tuned their credit card issuing and it is no more ‘easy’ to get a card from the bank. The bank is behind my barber for a settlement. Till people like my friendly barber hold their card, it would be a long way before the bank has a complete clean portfolio. 

Like my barber, people came for different purpose to Hazare’s fast. One guy got down from the car, wearing expensive clothes, posed for the media and signed for Jan Lokpal bill. I approached him and asked why he supports the bill. He said that what irritates him most is the TDS (tax deducted at source) every month while receiving salary and he has received a sms stating that if Jan Lokpal bill is passed, he need not pay tax for another 20 years, making him a staunch supporter of Hazare. My India is really great. I’m confident that corruption would get reduced in another 100 years. Always think long term:-)

4 Responses to “My Barber and CIBIL”

  1. Vikas said

    absolute hilarious and informative post!

  2. Hi Muthu,
    The post is funny, no doubt, but it has lot of information to think about as well.

    As you rightly mentioned, the so called “easy easy Bank” is no longer “easy” as they used to be. There is major overhaul which is going on with clear focus on returns. No more growth in business without profits is the mantra now. A detailed Fortune report came couple of months back. As they are embarking on a new path, the stock market has also rewarded them handsomely with a good 25% gain over the last year or so.

  3. CIBIL Reported Someone Else’s Credit Card In My Credit Report!!

    What an irresponsible organization it is & how lethargic their services are, seriously and how lethargic are their services. They have reported someone else’s credit card default in my report, due to which I had to go through a lot of pain, loan application denials and very much of a loss by taking loans elsewhere with higher interest rates.

    The details are provided here, with email exchanges between CIBIL and I.

    CIBIL & It’s Lethargic Services…

    Please go through this and share it with all public, however & wherever possible.

  4. Mary D'souza said

    My loan was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review

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