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Money Aug 27, 2013

Credit history: Why you can run but not hide

By Bindisha Sarang

Economic slowdown makes life difficult for individuals as job loss become the norm and money become scarce. More often than not when people lose their jobs, they are unable to repay their dues on various dues such as house loan, personal loan, credit card dues and the like. Banks have no option but to start their collection process. At times, people relocate within the city or move out of the city and banks find it difficult to trace them.

But if you think, you can run and hide from the bank, think again.

Increasingly banks are using skip-tracking tools to trace those people who skip payments. Join the conversation of Ravi and Ajay, two imaginary helpers created by Firstpost,as they discuss skip-tracing and why you can run but not hide from your bank.

Ajay is sitting in a coffee shop waiting for Raj. Even as he waits he changes the SIM card of his mobile phone. Ravi walks in.....

Getty Images

Getty Images

Ravi: Hey, what's with the new SIM buddy?
Ajay: Nothing, just changing my mobile number.
Ravi: And, why on earth would do that?
Ajay: Well you know, after being laid off for months now, I am still looking for a job. And unable to pay my personal loan, car loan and credit card dues. These bank people are calling all the time and reminding me to make payments. So, I thought I might as well change my mobile number and get rid off them.
Ravi: They will reach you at home.
Ajay: Not really, my lease agreement is almost over and I will be shifting to a new location. Banks can never get hold of me.
Ravi: You must be surely joking. Please tell me this is a joke.
Ajay: Why would I joke, I am stressed financially and have skipped payments. I need to look for a job, the last thing I want to now, is to deal with recovery agents.
Ravi:And you think your banks won't be able to trace you down, after missing payments.
Ajay: Hey chill Ravi, I plan to relocate within the city, but if I am unable to get work here, I might just go to Bangalore or some other place. Worse comes to worse, I might just head back home.
Ravi: Well, no matter how much you run, you can never hide. Banks will use skip tracing tools to locate you.
Ajay: Ski...skip....what?
Ravi: Simply put, skiptracing is the process of locating a person's whereabouts. The term "skip" refers to the person being searched for, leaving no clues behind to "trace" the "skip" to a new location.
Ajay: Great Scott. I had no idea about how does this **&^&^&% skiptracing tool works.
Ravi: Let's say you have three debts, which you havn't paid. First from HDFC bank, Second from Kotak Bank and the third from IndusInd Bank. Now these people are looking for you, but unable to locate you, after your James Bond vanishing act.
Ajay: Sounds good, go ahead.
Ravi: Let's assume you relocate to Banglore for the new job. Which means now, you have a new address and a new number in Bangalore. And the three banks are looking for you in Mumbai.
Ajay: That's exactly what I said, Eisenstein.
Ravi: You know that these three banks have access to your credit report with CIBIL, Equifax and the like.
Ajay: Of course, I know that.
Ravi: Now let's assume, you apply for a new credit card in Bangalore, with the new address and mobile number.
Ajay: Yes, I do plan to apply for a new card with Citibank.
Ravi: Yes, so these three banks will use the services of the credit bureau's skip-tracing tool, to get your new contact details.
Ajay: I did not get it. Please explain.
Ravi: So when you apply for a new credit card with Citibank, it will update this information with the credit bureau. The credit bureau will run a few search and match algorithms and identify you as the same person who has overdue debts with the three banks in Mumbai.
Ajay: Ah, I get it. So when the three banks use the credit bureaus services for skip-tracing me, they will get information about my new location, new address and new mobile number.
Ravi: Yes, and since these lenders have access to your latest updated contact information, they will stop their collection activities in Mumbai, and get in touch with you for recovery process in Bangalore.
Ajay: But how are credit bureaus able to match?
Ravi: Well there are special skip-tracing products, such as Cibil's "Locate Plus" and Equifax's "Implement Contact." As I said, they run search and match algorithms. They match your PAN number, date of birth, voter's card number, your permanent address and a number of other fixed data.
Ajay: Makes sense, I can change my address and mobile number. Not my date of birth, mother's maiden name or PAN.
Ravi: Don't forget, banks have become very stringent with KYC norms, and this makes skip-tracing easy.
Ajay: Hmn....
Ravi: Remember the quality of data which banks provide the credit bureaus is also increasing. And with each passing day, running from recovery agents could be easy, but not hiding.
Ajay: I also heard these recovery guys track defaulter's social networks sites, like Twitter and Facebook as well, to know their whereabouts.
Ravi: I know you are going through a hard time, but skipping payments or relocating or changing mobile numbers is not the solution.
Ajay: But what can I do?
Ravi: I suggest you visit a debt counselling agency, most of them provide their services free of cost. They will guide you regarding this issue.
Ajay: Makes sense, after all from my lenders, I can only run but never hide.

by Bindisha Sarang

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