INFORM CUSTOMERS WHEN BANKS ASK FOR THEIR CREDIT SCORE: WHAT RBI HAS TOLD CREDIT BUREAUS
- Recently, the Reserve Bank of India's (RBI) issued a directive to credit information companies (CICs) regarding the handling of credit information and customer notifications.
Customer Notifications
- CICs must alert customers through SMS or email when their Credit Information Report (CIR) is accessed by banks and non-banking finance companies (NBFCs).
- Credit institutions are also required to send SMS or email alerts to customers when they submit information to CICs on defaults or Days Past Due (DPD) on existing credit.
- These new rules will come into effect within six months.
Credit Information Companies (CICs)
- CICs maintain and analyse the consumer and business credit information of individuals and companies, as provided to them by banks and NBFCs.
- Based on this info, a CIC calculates and generates credit scores and credit ranks as per their creditworthiness and past credit history.
- Credit scores play a crucial role in determining a customer's eligibility for loans and credit cards.
Access to Credit Scores
- Customers can obtain their credit scores from CICs, typically for a fee.
- However, the RBI has instructed CICs to provide a "Free Full Credit Report (FFCR)," including the credit score, to individuals once a year.
- This report must be easily accessible on the CIC's website.
Data Correction
- If a customer believes that their credit data is incorrect, there is a process to apply for data correction.
- Banks and NBFCs should inform customers of the reasons for rejecting requests for data correction.
- This will help the customers understand the issues in their Credit Information Report.
CIC Responsibilities
- CICs are required to review their data acceptance rules and periodically assess their "search & match" logic algorithms.
- They must conduct a root-cause analysis of complaints and present the results to their board for review.
- Additionally, they should disclose complaint details on their websites.