Now Reading: Credit scores now update faster under RBI’s weekly reporting rule
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Credit scores now update faster under RBI’s weekly reporting rule
Since July 1, credit scores have been updating faster. The RBI mandated that all lenders report credit activity weekly, tracking data as of the 9th, 16th, 23rd and last day of each…
Since July 1, credit scores have been updating faster. The RBI mandated that all lenders report credit activity weekly, tracking data as of the 9th, 16th, 23rd and last day of each month and sharing it with credit information companies within four days. They must also submit complete updated information by the 5th of every month.
The change is aimed at making credit reporting more efficient, transparent and accurate. With retail, non-housing loans growing rapidly and many borrowers holding multiple credit lines, more frequent updates mean credit information and scores are likely to be refreshed more quickly.
Experts say borrowers with high-frequency digital loans, buy-now-pay-later users and credit card holders will be most impacted. Late payments and new loans will show up in reports within 10-12 days instead of 25-30 days. Borrowers are advised to time repayments carefully, use auto-pay, and avoid multiple loan applications.
Indian Opinion Analysis
The RBI's directive, issued under its 2023 Master Direction on credit information reporting, tightens a system that previously allowed lenders up to 45 days to update data. The faster cycle is designed to curb the practice of borrowers taking on multiple undisclosed loans across lenders, a risk flagged by the central bank's Financial Stability Report as unsecured retail loans now form 58.4% of household borrowings. For borrowers with good credit habits, the benefit is quicker reward for repayment, for those over-leveraged, the window to correct a default before it shows up shrinks from weeks to days. The next signal to watch is whether credit bureaus' default rates and score volatility figures shift over the coming quarters.
Source: hindustantimes.com
This brief was synthesised by AI from the source linked above.
