The Reserve Bank of India has made it mandatory for Credit Information Companies (CIC) to provide one base level consumer Credit Information Report (CIR) free of cost every year from January 1, 2017. The central bank has said the report must contain the latest position on credit institutions’ exposure to the individual as per records available with the CIC.
The contents provided by the credit information company in the Free Full Credit Report (FFCR) has to be the same as appearing in the most detailed version of the reports on the individual provided to credit institutions, including the credit score.
CIC’s have welcomed the move. “The RBI’s guidance is in keeping with the evolution of the credit market in India. Access to a free credit report will increase consumer awareness and help them in making more empowered financial decisions,” Manish Sinha, India Country Leader, Equifax Credit Information Limited said.
Harshala Chandorkar, Chief Operating Officer, CIBIL, called it a “very progressive move by the RBI” FeMoney asked Chandorka on the impact of the RBI’s directive and how should consumers use the facility. Here are her views:
On impact of the notification on credit information companies:
This is a very progressive move by the RBI aimed at propagating awareness on the importance credit history and discipline. As leader in credit information, CIBIL is committed to helping individuals understand and better manage their information to enable easier, faster and cheaper access to finance. We will start offering one free credit report annually to individuals by end of this year. We are confident that this move will further help us achieve our objective of partnering in the national momentum of driving financial inclusion and literacy.
Circumstances under which individuals seek the free report:
Monitoring and checking CIBIL Score and report should be treated as a credit health management exercise, and not only as one undertaken when you need loans. Therefore individuals should seek their credit report regularly and monitor their credit history through the year.
Should the free report be part of an individual’s ongoing credit review exercise:
We strongly advise individuals to keep monitoring their CIBIL score and report from time to time. Just like your regular health check you must also run a financial health check up to be in control of your financial stability. Reviewing your CIBIL Score and Report will provide you insights into your financial health with reference to your credit exposure – how much debt do you hold? How have you being repaying your loan EMIs and credit card bills? How many times have you applied for a loan or credit card? Do you have detrimental flags like “Settled”, “Written-Off” or “Suit Filed” against any of your loan accounts or credit cards?. This credit health checkup will help you take corrective and preventive measures in time for maintaining financial hygiene and a healthy credit report
Could this help in getting better deal for individuals?
Now that credit institutions like Bank of Baroda are offering rating-based lending to retail mortgage loan seekers, which involves providing differential rate of interest based on the borrower’s CIBIL score. Individuals must therefore monitor their report and score regularly to avail lower interest rates and better terms and conditions on their loans.