Two out of three borrowers in the country are unaware of their CIBIL score, an indicator of credit worthiness, despite good progress on the financial inclusion front, according to a report.
Two out of three borrowers in the country are unaware of their CIBIL score, an indicator of credit worthiness, despite good progress on the financial inclusion front, according to a report. CIBIL score as a parameter helps in understanding borrowers eligibility for loans. According to a survey done by Home Credit India, 52 per cent of the borrowers understand what a CIBIL score is and its importance. “Despite this, 68 per cent of the respondents did not know their CIBIL score. Interestingly, this group has already taken a loan and is still not in knowledge of CIBIL,” the report said.
The numbers were the lowest than the country average in Patna, with only 22 per cent of borrowers aware of their CIBIL score, followed by Kolkata (25 per cent) and Mumbai (25 per cent). Home Credit India, a local arm of the international consumer finance provider with operations spanning over Europe and Asia, conducted a research across 7 cities to understand the levels of financial literacy among the 1,000 borrowers. The survey also said 76 per cent of the borrowers did not know the interest amount on their loans.
They were only interested to know the EMI amount to be budgeted monthly but were found to be unaware of the interest amount separately, it said. The survey added that only 17 per cent of borrowers in Delhi, 19 per cent in Jaipur and 24 per cent in Mumbai knew the interest amount on their loans. “Financial Literacy is imperative for any country’s economic progress. This research on the financial literacy is aimed to understand our customers,” said Home Credit India Chief Marketing Officer Marko Carevic said. He added that the research showed that a majority want to understand their finances better and are keen to take financial literacy lessons.
This helps the company draw a meaningful financial literacy programme that will help people build an understanding of basics of personal finance like budgeting, good debt vs bad debt, and when to borrow, he said. The report also showed that 50 per cent of the respondents were found aware about mutual funds, while a whopping 95 per cent of the borrowers said they fully understood their bank passbook and its elements. It said that given the frequent visits to the bank branch, 87 per cent know the meaning of savings account and 80 per cent understands the meaning of current account. The women interviewed in the research were found to have a lower understanding of finances as compared to men, it said.