In a recent development, the Reserve Bank of India has made it mandatory for credit information companies to provide real-time updates. The move comes as the RBI has stepped in to strengthen the banking sector and make the loan process more feasible. Moreover, major complaints regarding CIBIL score have also prompted the bank to pitch in to address the issue. So, what does this mean for you? Will it improve your banking experience- or could it have downsides? Let’s take a closer look at what this new system brings.
Will It Benefit You?
Many people have had trouble getting loans because their CIBIL scores were not updated on time. To fix this, the RBI has now told all credit agencies, like TransUnion CIBIL, Experian, and CRIF High Mark, to update credit data in real-time.
This change will help people who want loans for cars, houses, or personal needs. It will be especially useful for those who finish one loan and want to apply for another right away. However, switching to real-time updates will be expensive. Credit agencies will have to spend a lot on technology and systems, which may increase their financial burden.
Recently, the central bank tightened the rules related to CIBIL scores. In January, the RBI issued a circular stating that when institutions like banks check the credit report of individuals registered via mobile number or email, they must inform the user.
This notification should be sent through SMS or email. The RBI’s order also mentions that compensation must be provided in case of a delay in resolving credit score-related complaints. The complainant is entitled to ₹100 for each day of delay.
What Is A Credit Score?
A credit score is a three-digit number that rates an individual’s creditworthiness and ability to obtain a loan, mortgage, or credit card. A credit score is based on a person’s credit history, which includes their active accounts, total debt levels, and repayment history. It is a three-digit number ranging from 300 to 900. Scores above 700 are considered good. Financial institutions are generally willing to offer loans to individuals with such scores. A credit score serves as a snapshot of a person’s financial history.
