A borrower could find the process of availing a loan to be most cumbersome as it involves lenders weighing the pros and cons of parting with depositors’ money for a profit. Attempts to guage the risk of a default by the borrower lies at the core of the lender’s credit assessment, making the process of securing a loan an uphill task.

A significant percentage of defaults, especially in the unsecured segment such as personal loans and credit cards, have been traced to some absconding borrowers who could be tracked only as far as the addresses they provide, so loan recovery for the banks became difficult in the past.

However, with the advent of Credit Infor-mation Bureau India Ltd (CIBIL), the banks are able to access near real-time information of people’s credit history, which could help them grant loans with confidence. CIBIL also provides email alerts to banks whenever a defaulting borrower applies for a loan. The credit report also enables a person with a good repayment record to get faster access to credit at competitive interest rates.

You can apply for a copy from CIBIL to check your credit score. The offline process requires sending identification documents to CIBIL through post for getting a hard copy of your report. In the online process, you pay the requisite fee Rs 470 online and submit online credentials to get a soft copy of the credit report by email. Credit scores can range anywhere from 300 to 900. Higher the score, the better for the borrower as it gives him/her better creditworthiness.

Here are a few things you can do to keep a watch on your credit score.

GET A COPY OF YOUR CREDIT SCORE:
You should study the credit report carefully. If you are convinced that it is flawed, you need to address the concern.

RAISE ISSUES THROUGH THE FASTER ROUTE:
You need to take up issues in your credit report with the bank first. The bank will then update the credit agency regarding the status. In case, the bank does not oblige, you can take up the matter with the banking ombudsman after waiting for a period of a month. One can file a complaint online at https://secweb.rbi.org. in/BO/compltindex.htm or file a complaint with the banking ombudsman simply by writing on a plain paper. For the format, visit this link: http://www.rbi.org.in/Scripts/FAQView.aspx?Id=24

PAY YOUR BILLS ON TIME
Whether they are loans or credit card payments, every payment counts. If you have hassles remembering payments consider setting up an automated system with your bank to get it cleared within the due date.

USE CREDIT CARD JUDICIOUSLY
Maintain and use your credit card. It serves as a tool to boost a good credit score. However, the trick is to use it well and avoid making late payments. This will provide a sample of how capable you are in managing loans in the long-term.

CREDIT TO DEBIT RATIO IS THE KEY
Your credit report is based on the flow of credit and debt. Here the ratio between these two factors is directly related to your credit score average. You need to act quickly and flag disputes in your credit report. If the concerns are taking time to be addressed, at least the issue will flagged as under dispute. This will protect you from being evaluated on the basis of a faulty issue in the credit report.

The writer is CEO of BankBazaar. com