Get ?100 Per Day As Compensation For Unfixed Credit Score Errors

Greetings, readers.

Inaccuracies in credit reports, as we all know, can spell trouble for consumers. The repercussions of a plummeting credit score, particularly when it's not your fault, can translate into costlier loans and financial frustrations.

But, my friends, the Reserve Bank of India (RBI) has just taken two progressive strides that promise to make credit scores a safer and more empowering asset for consumers. These pivotal decisions are set to roll out their impact in April 2024.

Let's delve into the key takeaways from these notifications.

Clear Communication is Key

First and foremost, the RBI is sending a clear and resounding message to credit bureaus – communicate transparently. You may have noticed a consistent emphasis on clear communication in recent notifications from the lending regulator. We're now seeing the same emphasis on credit score errors.

Empowering the Consumer

What does this mean for you? Well, brace yourselves for a notable change: whenever a lender accesses your credit history, you will receive an email and SMS alert. This marks a critical step towards curbing unauthorized checks that have been causing havoc with credit scores. Moreover, if you happen to find yourself in default or lagging behind in payments, you'll be promptly notified via email or text message. This newfound transparency is designed to prevent a repeat of the unfortunate incidents where consumers were blindsided by unauthorized loans and defaults.

Swift Data Updates

Furthermore, credit data shared by the lender must be processed by the bureau within seven days. In the event of data rejection, the reasons for the rejection must be communicated within the same time-frame.

Resolving Consumer Grievances

Even with best practices in place, there will still be instances of unresolved complaints. To address this, lenders are required to establish nodal offices. Credit bureaus will now also have the responsibility of analyzing the root causes of grievances semi-annually. If you discover an error and your lender is uncooperative in rectifying it, they must provide a clear explanation for their stance.

Access to Full Credit Reports

Once a year, all credit bureaus must furnish consumers, whose credit histories they hold, with a comprehensive credit report. This report should include your credit score, providing you with a holistic view of your financial standing.

Timely Resolutions with Penalties

Perhaps the most crucial aspect of these measures is the imposition of strict timelines. Lenders must resolve complaints regarding inaccuracies in credit reports within 21 days and promptly share the updates with the bureau. The bureau, in turn, must onboard the update within nine days. Failure to meet these deadlines within 30 days will result in a penalty of ?100 per day of delay, payable proportionately by the lender and the bureau for delays they're individually accountable for.

In sum, these decisions taken by the RBI are a significant leap forward in enhancing the safety and transparency of credit scores. They empower consumers and ensure that credit bureaus and lenders are held to a higher standard of accountability.

This regulatory shift is not only beneficial for individuals but also a testament to the growing importance of fintech and financial growth in India.

As fintech enthusiasts and entrepreneurs, let's stay vigilant and make the most of these improvements in our financial landscape.

PS: While we're on the subject, do check out BankBazaar's huge repository of content on the Credit Score Awareness Week.