Introduction:

In a recent announcement, the Reserve Bank of India (RBI) has rolled out significant updates to the regulations governing CIBIL scores. These changes, slated to be implemented from April 26, 2024, are aimed at addressing consumer complaints and bolstering transparency in the credit reporting landscape. Here are the five key updates every borrower should be acquainted with before embarking on a loan application.

The 5 Key Updates:

1. Customer Notification Requirement:

Moving forward, whenever a bank or Non-Banking Financial Company (NBFC) accesses a customer’s credit report, it becomes mandatory to promptly convey this information directly to the customer. This notification, whether through SMS or email, ensures borrowers are kept informed about which entity is scrutinizing their credit history.

2. Reason Disclosure for Rejected Requests:

In a stride towards heightened transparency, if a customer’s loan application faces rejection, the lending institution is obligated to provide a lucid explanation for the denial. Lenders must compile a list of reasons for rejection and promptly communicate them to the customer.

3. Free Full Credit Report Annually:

Empowering consumers, credit companies are now required to furnish a complimentary full credit report to customers once a year. This convenience can be accessed by providing a link on the company’s website, allowing borrowers easy and regular access to their credit information for review.

4. Pre-Default Information Sharing:

Lending institutions are mandated to notify customers in advance of any impending default on their part. This proactive measure ensures that borrowers are cognizant of the situation before any default is officially reported. The information can be efficiently disseminated through SMS or email.

5. Timely Resolution of Complaints:

Credit information companies are now held accountable to resolve customer complaints within a stipulated timeframe of 30 days. Failure to meet this deadline will incur a daily fine of Rs 100, underscoring the significance of promptly addressing customer concerns.

Conclusion:

With the implementation of RBI’s new CIBIL score rules on the horizon, borrowers are encouraged to acquaint themselves with these updates to navigate the loan application process with enhanced transparency. These changes are designed to empower consumers, offering clearer insights into their creditworthiness and fostering responsible lending practices. Staying informed is key to making more confident and informed financial decisions.