|
|
Credit score is new system in India, launched on Thursday, November 29, jointly by Credit Information Bureau of India (CIBIL) and TransUnion.
CIBIL-TransUnion score tells lenders about the credit worthiness of a person, based on his/her repayment history. The score is a number between 300 and 900. Individual credit worthiness increases with the credit score.
Reserve Bank of India, the central bank is yet to issue directions and rules for co-operative banks to be members of CIBIL.
Repayment of credit card bills and personal/home/auto loans is the main criteria of a credit score.
According to Geoffrey Miller, vice president, TransUnion said, "The scoring model factors in the payments history, outstanding debt, credit account history, recent credit enquiries and the different types of credit the borrower has availed of."
The lenders however will not get data on job status, type and salary of the borrower.
Only persons who have taken a loan six months back will have a credit score.
Presently, there are 77 banks, 32 Non-Banking Financial Companies, six state financial corporations, 10 financial institutions and two credit card companies are members of SIBIL.
Insurance companies and telecom companies also express interest in CIBIL memberships.
Similar credit system exists in the US
Although this system is new in India, similar system exists in the US. There are mainly three credit-reporting agencies – viz. Experian, Equifax & TransUnion.
Apart from the repayment of loans and credit card bills, timely payment of utility bills like electricity, phone, etc also play a role in individual credit score.
Before applying for loans, individuals can check their credit score from the agencies for a nominal fee. They can also ask to remove any false information. Credit history that is older than seven years is removed from the reports.
The message to borrowers is clear - if you want to take a loan, be punctual in repaying your credit card bills and do not delay the payment of loans of any type – personal loan, vehicle loan or home loan.
