The Reserve Bank of India (RBI) has rolled out new guidelines to enhance the frequency and transparency of credit score updates for borrowers. These measures aim to benefit both banks and customers by improving credit appraisal processes and promoting better financial discipline.
Key Highlights:
- Credit Score Updated Every 15 Days
- Banks and Non-Banking Financial Companies (NBFCs) are now mandated to update customers’ credit scores every 15 days.
- This data will be shared with Credit Information Companies (CICs) bi-weekly, ensuring timely updates of borrowers’ credit status.
- Benefits for Borrowers
- Customers with excellent CIBIL scores (above 700) can enjoy faster updates reflecting timely repayments, enabling access to better interest rates and loan approvals.
- Borrowers with low scores can track improvements more quickly as they pay off debts, helping them rebuild financial credibility.
- Implications for Banks
- Faster updates allow banks to make informed lending decisions, reducing risks associated with defaulters.
- Real-time credit behavior insights ensure better allocation of resources and optimized lending strategies.
Understanding CIBIL Scores:
- A CIBIL score above 700 improves loan eligibility and ensures competitive interest rates.
- Scores below 500 severely limit borrowing options as most financial institutions consider them too risky.
Impact on Customers:
These rules empower borrowers to monitor and improve their credit profiles actively. Timely updates benefit both the responsible borrowers by rewarding good behavior and those working to overcome bad credit history.
By fostering transparency and real-time updates, the RBI’s measures ensure a more efficient and inclusive financial ecosystem.
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