The Reserve Bank of India (RBI) has announced new rules regarding credit scores to address common concerns and improve the system’s transparency.
These changes will make it easier to access loans and help individuals keep their credit scores safe. The RBI aims to create a more efficient and clear credit score system for everyone.
Key Changes in Credit Score Management
The RBI has introduced six new guidelines to enhance the CIBIL score process.
These updates are designed to simplify the loan application experience, improve transparency, and assist customers with good credit scores in obtaining loans more easily.
Faster Credit Score Updates
Starting January 1, 2025, credit scores will be updated every 15 days, allowing individuals to track their credit status more regularly and stay informed about their financial standing.
Instant Notification for Credit Checks
Now, whenever a bank or financial institution checks your credit score, you’ll receive a notification via email or SMS.
This change addresses past complaints about the lack of notice for credit checks, ensuring you are always aware when your credit score is reviewed.
Transparency in Loan Decisions and Access to Credit Reports
To further increase transparency, the RBI has introduced guidelines related to loan rejections and access to credit reports.
Explanation for Loan Rejections
Financial institutions must now provide a clear reason if a loan application is rejected. This will help applicants understand the rejection and work on improving their credit scores.
Annual Free Credit Reports
Under the new rules, credit companies are required to offer a free, comprehensive credit report once a year.
Customers can access this report on the company’s website to review their full credit history and understand their financial position.
Additional Protections for Borrowers
To protect customers from unexpected credit score impacts, the RBI has set up new rules for loan default notifications and complaint resolution.
Advance Notice Before Default Reporting
If you are at risk of defaulting on a loan, the institution must inform you before reporting it to the credit bureau.
This notification will be sent via email or SMS, giving you a chance to address any issues before they affect your credit score.
Timely Resolution of Complaints
If you file a complaint regarding your credit score, credit companies must resolve it within 30 days. If they fail to meet this deadline, they will be fined Rs 100 per day.
Banks have 21 days to provide necessary information to the credit bureau, and the bureau has 9 days to address the complaint. Both parties face penalties if deadlines are not met.
These new rules by the RBI aim to make credit management easier, improve transparency, and ensure that customers have better control over their credit scores.
