ATM :: Is CIBIL worthy? Erroneous credit scores distress bank customers

G NAGA SRIDHAR | HYDERABAD | JUNE 25 2015 | The Hindu Business Line
Some have been denied loans as their CIBIL records paint them as defaulters


Erroneous credit reports with little scope for speedy correction are giving some genuine bank customers nightmares.

Consider the case of N Krishna, who wants to apply for an educational loan for his son. A check on his CIBIL (Credit Information Bureau India Ltd) score gave him a shock. While some regular loan payments are not reflected in his scorecard, there are new loans, which he never took, against his name.

“This is a distorted image and my bank now says it cannot extend the loan, for no fault of mine,” he told Business Line.

There are others who have been shown as credit card defaulters and as having dues on loans that have already been closed.

What it means
About 80 per cent of all approved retail loans for individuals are based on the credit score given by CIBIL, which is seen as sign of credit-worthiness of a loan applicant, based on his financial track record for the previous 36 months.

CIBIL has access to data on 400 million bank customers, which it uses to generate scores ranging from 300 to 900. Loans are generally sanctioned for applicants with scores greater than 750.

However, the fixing of responsibility for wrong scores is not clear. While a dispute resolution mechanism is offered by Cibil, it claims that the real responsibility rests with the customer’s bank, which sends the data. “We need to go back to the bank and ask for updated information if there is dispute on a score,” said Harshala Chandorkar, Vice President – Customer Relations, CIBIL.

She did not reveal the exact number of wrong reports but claimed that only 0.001 per cent of total reports are disputed. She also declined to reveal the total number of reports generated by CIBIL in a given period.

If 80 per cent of total retail loans are sanctioned on the basis of these reports, the number of contested reports could be high even if they account for only a fraction of the total number of reports.

On their part, banks simply ask the customers to approach the rating agency to correct discrepancies, and customers end up shuttling between the two.

Take the case of G Subrahmanyam, a software engineer, who identified a property and applied for a home loan about two months back. “My credit report shows a loan that I never took. My bank asked me to get a fresh report when I explained. But I missed the identified property due to this delay, for no fault of mine,” he says.

No quick fix
CIBIL norms indicate that correction of discrepancies will take at least 35 to 45 days. But in reality it could take longer, particularly if a bank does not respond to CIBIL immediately.

So, what is the solution? “You better check your CIBIL score regularly like you’re doing a regular health check-up,” says Chandorkar.

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