Dimi: Why do credit reporting agencies penalize an “insufficient credit history” like a deadbeat that defaults?
Is it fair that someone who happens to rarely use credit but has never defaulted the few times that they did gets treated in the same way as someone who defaults with lower credit scores? I don’t understand.
Answers and Views:
Answer by vips
The main credit reporting agency in India is CIBIL: Credit Information Bureau India Limited.
This agency gives points on basis of loans and their repayment they gives scores which is used by banks and finiancial institutions for grants of loans and credit cards to you.
If you have not taken any loan or any credit, than your score would be -1, which means that this person is given clean chit, but banks are not accepting this as due to defaulters and fake loans, and Supreme Court’s ruling of no hard recovery, Banks and FI’s dont want to take chances.
And to the surprise, when you apply for credit card or loan, and if it get rejected than your score would get further negative points.
If you are looking for loans or other credits AND YOU WANT TO IMPROVE YOUR CREDIT SCORE, than take a small loan for tenure of 12 months as like loan against bike, or ac, or lcd, or laptop and pay the installments on time. Yhis would boost your credit card or ELSE YOU NEED TO HAVE HIGH VALUE BOOKS OF ACCOUNTS.
Regards
Vipul Gambhir
MindTree Group
(Director)
Insufficient credit history is a totally different thing to bad credit historyAnswer by Caveat Emptor
They are not “penalized.” What is reported are simply facts.Answer by bdancer222
There is a big difference between a credit report with limit history and one with defaults. Unfortunately, the scores could be similar as the limited history simply doesn’t have the track record to earn a higher score. But creditors look at the whole credit report, not just the score.
A limited history still makes you an unknown. That means you are a higher risk.
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