If someone fails to pay their loan EMI on time or settles the loan, it negatively impacts their credit score, making it harder to get a loan in the future.
To address this, the Reserve Bank of India (RBI) has issued a new directive to banks and financial companies concerning CIBIL scores.
New Rule
According to the new RBI rules, customers’ credit scores (CIBIL) will be updated every 15 days.
The RBI has directed banks and financial institutions to ensure timely updates of credit scores.
The RBI governor recently announced that credit data will be refreshed every 15 days.
Additionally, customers have been advised to send their credit information to Credit Information Companies (CIC) every two weeks.
This faster update of credit scores will benefit both banks and customers.
Customer CIBIL scores can be updated on the 15th of each month and at the end of the month.
Credit institutions (CIs) and credit information companies (CICs) can also choose their own 15-day intervals for data updates if they prefer.
However, credit institutions must provide customer credit information to CICs every month.
These individuals will benefit
This change will benefit both borrowers and lenders, as accurate credit information is crucial for banks and NBFCs.
This will help them make better lending decisions and determine loan interest rates.
Customers with good credit scores will get loans at lower rates, especially those who have repaid their loans and seen their credit scores improve.
This will help banks assess customer risk more accurately and offer loans at lower rates.
The number of defaults will go down
If the credit score is updated every 15 days, banks will have accurate customer data.
This will help them identify which customers can repay loans and which cannot. As a result, banks will be able to offer loans to the right customers at reasonable interest rates.
This is also expected to reduce defaults since any discrepancies in the CIBIL score will be corrected within 15 days.
