Keep a tab on your credit report
Credit information—a record of the loan repayments made by a borrower that is collected by credit information companies (CICs)— is a critical barometer to gauge an individual’s financial health and helps address the problem of asymmetric information between borrowers and lenders. Financial institutions check the credit history or financial behaviour of an individual before taking decisions relating to credit and loan agreements. CICs also offer value-added products like credit scores.
CICs are governed by the Reserve Bank of India (RBI) and provisions of the Credit Information Companies (Regulation) Act, 2005, CIC Rules, 2006, and CIC Regulation, 2006. Currently, there are four CICs in India—Trans Union CIBIL, Experian, Equifax and CRIF High Mark. Specified users, such as insurance companies, stock brokers, credit rating agencies, and resolution professionals, besides individual borrowers, can obtain credit information reports from these CICs.
Of late, there has been a surge in customer complaints related to the accuracy of credit reports. Many individuals have found errors in their detailed credit history that have affected their scores. Some have also complained about their credit history being accessed without being informed. So, It becomes necessary for individuals to thoroughly check the statements provided by CICs.
A few borrowers had, after noticing these errors, approached the CICs for correction. However, CICs directed them back to the respective banks for necessary rectifications in their credit history. This was overall a cumbersome process. However, RBI has streamlined the grievance redress mechanism by placing CICs under the ambit of integrated ombudsman scheme in August 2022. Further, RBI guidelines state
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