In a bid to boost consumer protection and improve the overall credit reporting process, the Reserve Bank of India has implemented new rules with regard to credit bureaus. Implemented from Jan 1, 2025, the new rules aim to expedite the process of timely and accurate credit reporting and improve the overall lending environment. The new rules have made crucial amends to several aspects of credit score reporting which will benefit borrowers and lenders. Let’s find out what these benefits are.
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Faster updatesThe old reporting system delayed repayment-related updates by up to 40 days, leaving lenders to assess borrowers based on outdated data. The new system has cut down this time to 15 days to ensure faster updates on credit scores, helping borrowers with the necessary knowledge to improve their credit scores. The new rules mandates lenders to update credit score data twice a month, which is within seven days from the 15th to the last days of the month. After the data is updated, the bureaus must update the same within five days of the deadline.
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Faster updates will help keep credit histories accurate and up-to-date, reducing errors that could impact a borrower’s access to credit. Bureaus will monitor lenders’ compliance and report the ones who fail to meet the revised guidelines.
Standardise reporting and scoring
The revised rules also mandate credit bureaus to standardise terminology and report scores in the 300-900 range to facilitate easier comparisons. Consumers will receive a single report whether they have multiple accounts or addresses, and will have the option to add comments directly to the report. Bureaus must also include details of the guarantor or co-borrower in the report to facilitate better risk assessment and promote fair lending practices.
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Penalty of ₹100/day
Bureaus must notify consumers whenever their credit history is updated or accessed, and lenders are expected to address complaints without delay. If a complaint isn’t resolved within 30 days, consumers will be entitled to ₹100 per day as compensation starting from the 31st day, encouraging faster resolution.
Data Quality Index (DQI)
The index will assess and score the quality of data lenders submit to bureaus, focusing on accuracy in consumer details like name, DOB, ID proofs, and contact information. Monthly DQI scores will help lenders improve data management, with feedback provided if scores drop below industry standards. This initiative ensures accurate credit evaluations and benefits consumers by encouraging better data practices.
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A faster update cycle will improve the accuracy of credit scores used by lenders, helping borrowers with good repayment habits access loans more quickly. Fast updates also allow borrowers to better understand their financial health and make informed decisions.
