Mohan Jayaraman underlines the need to maintain a good credit history record by settling repayment matters with banks and lenders on time

"One must regularly check one's credit report, especially before taking a fresh loan. Actively manage your finances, because a bad credit history may later create problems for getting a fresh loan," said Mohan Jayaraman, COO, Experian Credit Information Co of India. He was speaking at a seminar organised by Moneylife Foundation, on Understanding the Importance of Your Credit History & Credit Score.

Even today, many people are unaware about credit bureaus and the way they function. These organisations collate information on an individual's finances and assign a credit score to each person, and this consumer information is provided to banks and other financial agencies. The credit information report is an individual's loan repayment track record.

"A series of such instances have shown that customers themselves are unaware of their loan repayments and defaults, which later leads to rejections of loan applications. It is necessary for people to be more vigilant about their credit history," Mr Jayaraman said.

He stressed the importance of having a healthy credit score and how this is assigned. The Experian COO explained what constitutes a credit history and how someone can improve upon the score. Drawing from his 17 years of experience in consumer banking, half of this with ICICI, Mr Jayaraman also gave other tips to borrowers.

"If you regularly check your credit history, you could spot mistakes in case there are any, and you can contact your bank, or lender, to correct them," he said. He also busted some credit myths and clarified what is not included in a credit report.

Mr Jayaraman pointed out that different credit bureaus had different ways of evaluating credit history and assigning scores, but it depended on the banks how they used the information to grade the viability and reliability of the credit seeker.

Replying to a question, he said that the customer had no say with regard to the credit bureau the borrower wished to approach or share information with. "If you become a co-guarantor to a loan, like taking a loan together with your spouse or friends, the defaults by the other person would also affect the credit history and your credit score," Mr Jayaraman said. He underlined the need to settle all matters with banks and other lenders to ensure that the credit history is more accurate.

He said it was necessary to have a credit history record , as it would make getting a loan easier and also prevent identity theft. "Ultimately, the best thing to do is to pay up as agreed with the lender. In case there is a genuine reason for delay on repayments, talk to your bank. Most of them are ready to help, because it is not in their benefit to spoil your credit score," Mr Jayaraman said.