Cibil score to help borrowers negotiate for cheaper loans

Cibil score to help borrowers negotiate for cheaper loans

Mumbai: Credit Information Bureau (India) Ltd (Cibil), the country’s largest collector of databases on borrowers, has from Wednesday permitted individuals to access credit scores for a fee, giving them a bargaining chip for cheaper loans.

The Cibil TransUnion Score is a three-digit number ranging 300-900, which helps in estimating the likelihood of loan repayments. A score closer to 900 indicates a borrower is least likely to default.

Banks have been accessing the scores since 2007 and are increasingly dependent on them to check individual credit history before lending.

As much as 37% of new loans sanctioned in 2008 had a score above 800 and the ratio jumped to 57% in 2010, according to the bureau.

With consumers now gaining access to it, the scores become a two-way street, said V.N. Kulkarni, chief counsellor at Abhay Credit Counselling Centre.

“Just like in western countries, Indian consumers can now bargain for a lower rate with banks armed with their credit score," said Kulkarni, a former banker with the Bank of India. “It’s a win-win for both banks as well as consumers."

Consumers can access their detailed credit report and score by paying 450 and filling a form at and furnishing proofs of identity and address.

The bureau’s managing director Arun Thukral said consumers can expect to get a full report and the score within one week to 10 days of applying.

Currently, individuals can access their reports by paying a fee of 142. The report consists of a summary of loans an individual has taken and does not indicate the likelihood of getting a loan, which a credit score provides.

Thukral said the higher fee for a credit score will not be a deterrent.

“We have given out thousands of credit reports since we started disbursing them in August 2009, and consumers were always asking for their scores," he said. “Going forward, we plan to make the score accessible online."

Launched in 2004 with four million credit records, the bureau has 207 million records, including 200 million individual credit histories.

As many as 500 banks, financial institutions and non-banking finance companies access the company’s records.

Earlier this month, Sumant Kathpalia, head consumer banking at IndusInd Bank Ltd, said a stronger credit bureau was a reason for the bank’s buyout of 200,000 credit card consumers of Deutsche Bank AG in India.

“The credit card business went down in 2008 because of overleverage, as there was much less information about borrowers, but now Cibil is up and running and that gives us confidence in picking customers," he had said.