Credit Score Update: Maintaining a good credit score can be challenging, especially if you miss loan payments. Banks often report such defaults to CIBIL (Credit Information Bureau), negatively affecting your credit history. However, the Reserve Bank of India (RBI) has introduced new guidelines that aim to protect your credit score and bring relief to borrowers. Here’s what you need to know:
1. Advance Notification for Credit Checks
RBI has directed all credit information companies such as CIBIL, Experian, and CRIF High Mark, to notify customers whenever their credit report is accessed by banks or non-banking financial companies (NBFCs). Customers will be informed via SMS or email about the inquiry, ensuring transparency in credit checks.
2. Clear Reasons for Rejected Requests
If a customer’s request is rejected, whether for a loan or credit card, the institution must provide a formal reason for the rejection. This allows the customer to understand the issue and take corrective action. Furthermore, credit institutions must maintain and share a standardized list of reasons for rejecting applications.
3. Free Annual Credit Report
As per the new guidelines, credit bureaus must provide customers with a full credit report free of charge once a year. A dedicated link will be made available on the credit bureau’s website to access this report. This ensures that customers can regularly monitor their credit scores and history without additional costs.
4. Notification Before Reporting Defaults
If a customer is at risk of being listed as a defaulter, banks and lending institutions must notify them beforehand. This notification, sent via SMS or email, allows customers to address pending payments and avoid being reported to credit bureaus. Additionally, nodal officers will be appointed to handle customer grievances related to credit scores.
5. Resolution of Complaints Within 30 Days
If a customer raises a complaint regarding inaccuracies in their credit score or misuse of their data, the credit bureau must resolve it within 30 days. Failure to do so will result in a penalty of ₹100 per day. Banks have 21 days to report issues to the credit bureau, and credit bureaus have 9 days to resolve the matter.
Key Takeaways from the Guidelines
- Customers will receive prior notification before any changes or checks to their credit reports.
- Free annual credit reports will empower borrowers to track their financial health.
- Institutions are mandated to resolve complaints within a specific timeframe or face penalties.
- Banks and NBFCs must provide clear reasons for rejecting customer requests.
Relief for Borrowers
These measures, set to be implemented in the coming year, will enhance transparency and reduce the likelihood of errors or unfair practices affecting credit scores. Customers will now have more control and awareness about their credit history, reducing the chances of disputes and fraud.
With these proactive steps by the RBI, borrowers can safeguard their credit scores and ensure better financial planning for the future.