Credit Score Rules: Understanding your credit score is crucial when applying for loans or credit cards. Recently, the Reserve Bank of India (RBI) responded to numerous complaints by introducing five new rules regarding credit scores, also known as Cibil scores. These rules aim to empower customers and ensure fair practices by financial institutions.
Firstly, whenever a bank or non-banking finance company (NBFC) checks your credit score, they are now required to inform you about it promptly through SMS or email. This transparency helps you stay informed about your financial standing.
Secondly, if your loan application gets rejected, the RBI mandates that the lender must provide clear reasons for the rejection. This empowers you to understand why your request was turned down and take necessary steps to improve your creditworthiness.
Thirdly, you are entitled to receive a free credit report once a year from credit agencies. This report, which can be accessed through a simple link on their website, provides a comprehensive view of your credit history and score without any cost.
Moreover, before reporting any default on your part, banks or lending institutions must notify you in advance. This gives you an opportunity to rectify any issues and avoid negative impacts on your credit profile.
Lastly, if you face any discrepancies in your credit report, credit agencies are obligated to resolve these issues within 30 days of reporting. Failure to do so could result in penalties, ensuring that your concerns are addressed promptly.
These new rules by the RBI are designed to protect consumers and promote transparency in the lending process. By understanding and utilizing these guidelines, you can better manage your financial health and make informed decisions when applying for credit.