Cleaning the credit scorecard
Customers must spot lapses before credit bureau, bank can take corrective steps. For customers who want to know their individual credit rating scores, buying a credit information bureau’s (CIB) report will take just a few minutes. However, trying to clear any lapses in that report could take a month. Besides, almost always, the onus of getting the lapses rectified will remain with the customer.
A CIB collates a customer’s personal credit history from banks and other non-banking finance companies. Customers can buy the credit scorecards from the bank or directly from the bureaus the bank has tied with. The cost is a nominal Rs 142 per report.
“Such reports are especially useful for customers who have multiple credit lines, like a home, auto or personal loan. Even otherwise, knowing your personal score at least once every six months is recommended,” says Mohan Jayaraman, managing director, Experian Credit Information Company of India.
| CREDIT RATINGS |
| Who should take it? * Those with more than one loan or lender |
| Why should one take it? * Payments made may not be updated in the bank’s system * Loan could be rejected if marked as delinquent customer * Awareness can thwart possible identity theft |
With the report in hand, you would also be able to resolve common problems that individual customers face. For instance, despite regular credit card payments, Vikram Rana’s credit scorecard showed a three-month lag in his last credit card payment. Luckily, Rana had asked for the report before applying for a loan and had enough time to get the necessary corrections made.
However, many like Prashant Paranjpe realise the need to track one’s credit history only when credit is denied. Paranjpe’s request for a personal loan was rejected due to non-payment of Rs 856!
A few months before, following a payment discrepancy in his credit card statement, the bank’s collection agency agreed to ‘write off’ the disputed amount that he wasn’t liable to pay. But, banks use the term ‘write off’ to describe unpaid amounts and the wrong terminology impacted Paranjpe’s credit score negatively. Customers should insist on a ‘reversal of charges’, instead of a ‘write off’.
According to credit bureaus, another area of concern is the possibility of identity theft, wherein the details of one customer’s identity (like residential address and so on) are used by another to buy credit for himself. Though such cases haven’t been reported on a large scale, timely access to credit reports can be used to prevent any such fraud at the earliest.
However, credit bureaus say, such issues will get highlighted only when a customer points these out. So, while the data from a bureau may be right, there is no guarantee that the lender from whom they have sourced the information has updated his system. Any changes that need to be incorporated can only happen if the bank’s data shows it.
The Credit Information Companies Regulation Act mandates bureaus to approach the bank and resolve any customer issues within 30 days. Most CIBs already have a system in place that follow a time frame within which the bank’s nodal or higher officers are contacted to get the discrepancy corrected.
“But, the resolution of such issues may get delayed, especially when the bank contests the customer’s stand,” says Samir Bhatia, managing director and CEO, Equifax Credit Information Services.
Today, most banks have multiple tie-ups with bureaus. In such cases, there may not be any differentiating factor in the reports and customers have the option of buying just one report.
However, customers are advised to check out reports from every bureau the bank has tied up with, if a complaint has been raised or settlements made.
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