Credit Bureau assigns a 3 digit number called as credit score which ranges from 300 to 900. It serves as a numerical representation of a borrower’s creditworthiness, reflecting their financial behaviour. Lenders utilize this score to assess the risk associated with granting loans.
A high credit score can lead to better loan terms, including lower interest rates and higher credit limits, while a low score might result in loan rejections or unfavourable terms. Credit Bureaus are vital in the financial ecosystem, serving as essential resources for borrowers seeking loans. However, they often present challenges. Borrowers encounter several challenges that can significantly impact their financial well-being for e.g.:
- Discrepancies in credit reports and score across bureaus
- Inaccurate and Incomplete data
- Inconsistent Inquiries
- Inaccurate Reporting
- Delayed Updates
- Duplicate accounts
- DeDupe issues
These issues can lead to low credit score, loan rejections, higher interest rates, and a sense of frustration for borrowers seeking fair access to credit. The reason for such issue faced by the borrower is because each bureau may reflect different score/report based on the same financial behaviour due to variations in algorithms and data collection methods. This inconsistency can confuse borrowers about their actual creditworthiness. However, the Reserve Bank of India (RBI) has implemented significant changes to streamline the credit reporting rules
RBI has mandated lenders to report to Credit Bureau every 15 days. Additionally, the Reserve Bank of India (RBI) has mandated a penalty of ₹100 per calendar day to be charged to Credit Bureaus if they fail to resolve disputes within 30 days of filing. Despite advancements in the credit reporting system, significant challenges still exist for borrowers.
A recent incident which highlights the importance of credit score where a marriage proposal in Murtizapur was cancelled after the bride’s family discovered the groom had a low CIBIL score, indicating financial instability read more. This shows how important is a credit score for an individual!
For individuals grappling with low credit scores, seeking professional assistance can reach out to Athena Credxpert a credit counselling company which offers expertise in managing and improving your credit report and score.
Contact Athena Credxpert
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