A recently launched three-digit credit score facility along with a credit information report is all set to make the lending process more transparent while inculcating financial discipline and enhancing consumer awareness on credit information, says managing director of Cibil, Arun Thukral. In a conversation with Ritu Kant Ojha, Thukral says that the score will give institutions information about an individual’s credit history, thus providing it with a better decision making capacity. Excerpts:
Why this move to provide credit score along with the credit information report?
We have been selling credit information report to consumers since 2009. However, after receiving feedbacks from many of them urging us to provide credit scores along with the report, we decided to go ahead with demand. The company was already selling credit scores of consumers to banks, and now we have extended the facility, in tie-up with TransUnion, to individuals as well.
What is the significance of a credit score for a consumer?
The Cibil TransUnion Score is a three-digit numeric summary of an individual’s credit history. The score is derived by using the details found in the “Accounts” and “Enquiries” sections on the credit information report and ranges from 300 to 900 points. The closer the individual’s score is to 900 the more favourable the loan application will be viewed by a credit institution. The score plays a critical role in the loan approval process.
Is the score reflective of the past loan repayment record of a customer?
Yes. And it provides a lender with an indication of the “probability of default” of the individual based on his/her credit history. What this means is that the score tells a credit institution how likely the individual is to pay back a loan (should the credit institution choose to sanction the loan) based on the individual’s past pattern of credit usage and loan repayment behaviour.
Credit information report is available at a cost of Rs 142. However, along with the credit score the report costs Rs 450. Don’t you think it is priced higher?
Internationally, the cost to access credit information report comes to about $10 while we are charging about $2. Similarly, charges for credit score are much higher in other countries. The report and the score are technology driven and it’s a long process to arrive at the score. It needs a special algorithm to calculate the three-digit credit score and that involves huge cost. Hence, the cost has been kept