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Photo: iStock
Photo: iStock

More consumers checking credit scores amid pandemic

North India saw the highest rise in enquiries for credit reports. They were up 31% in June compared with May. South India saw an increase of 28% and west India 22%

Covid-19 is prompting more and more consumers to keep a tab on their credit scores. There was a 25% increase in the number of enquiries for credit reports in June compared with May, according to data from a combined statement by online financial marketplace BankBazaar.com and credit information company Experian.

North India saw the highest rise in enquiries for credit reports. They were up 31% in June compared with May. South India saw an increase of 28% and west India 22%.

The pandemic has led to pay cuts, job losses and cash flow issues. As a result, banks, non-banking financial companies (NBFCs) and card issuers have taken steps to reduce risks. There have been tightening of lending policies, asking for a higher credit score and a reduction in credit limits.

BankBazaar, which gives out free credit score, saw 111% jump in consumers checking their scores in FY20. Even other platforms saw a spike in the number of enquiries for free credit report. “We have seen a three times rise in enquiries over the last couple of months," said Radhika Binani, chief product officer, Paisabazaar.com.

“With the growing disruption in income and uncertainty, a larger number of customers are looking to both track and build their credit score," Binani added.

Digital KYC (know your customer) has also gone up. BankBazaar saw a rise in credit applications via digital KYC. Of the total application for loans on the platform, 41% came from south India. “As safety becomes paramount, financial institutions predict a 100% growth in digital lending by the end of this year," said Adhil Shetty, CEO, BankBazaar.com, in the statement.

Digital KYC can help borrowers get quick access to credit, and save costs for lenders. “It will provide cost efficiencies around acquisition and automate decision-making. Consumers get timely and seamless access to credit while financial institutions are assured of identity verification," said Sathya Kalyanasundaram, country head and managing director, Experian India, in the statement.

Metros saw an aggressive rise in demand for credit. About 21% of applications were from Delhi-NCR, followed by Hyderabad at 16%.

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