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Credit Information Companies collate data of borrowers from lenders and share consolidated report

The tussle between bankers and borrowers is an age-old story. In the early days of my career as a retail banker, I used to sit across the table with defaulters who dared me to do whatever I liked, but they wouldn’t pay. They had the comfort that despite defaulting and being pursued for repayment, they could continue borrowing from other banks and lending institutions. Banks, consequently, made all customers pay (as an insurance for defaulters) by raising rates. In other words, good borrowers paid for the misdeeds of the bad borrowers. 

This changed when an Act of Parliament allowed setting up of Credit Information Companies. Their job: collate data of individual borrowers from all lenders and share the consolidated report – popularly known as credit score – across lenders. Most observers and the non-defaulting borrowers cheered as the default rates in retail lending plunged. A good credit score from CIBIL became the latest thing to collect. 

But then, banks began to misuse this advantage by arm-twisting borrowers to pay unjustified charges and fees. Otherwise, their credit score would be spoilt. And ones who refused to cow down found that they were unable to borrow as their credit scores were impacted by the so-called “default”. 

Worse still, borrowers, wanting to know their score, had to pay a stiff amount to CIBIL. When they protested about the wrong data, they were told that CIBIL has approached the lenders and is awaiting response from them. The standard line: “we can only report the data as reported by the lenders and cannot correct or delete that data on our own”. And lending institutions refused to respond for months together. The borrower, without a recourse, had to go to consumer courts as there was/is no independent oversight over CIBIL. 

In response to rising complaints, a committee set up by the Reserve Bank of India recommended that as a first step, one credit report should be provided free of cost to the borrowers every year from January 1, 2017. 

Interestingly, when I checked the CIBIL website in mid-January, I did not see any signs of the promised free credit report. So, when someone asked about the report, I confidently responded that the service had not started. 

However, on further detailed checking, I discovered a link hidden away within the folds of its main landing page on free credit report. It made me jump through hoops and kept pushing its expensive paid credit report (Rs450) before allowing me access it. But it refuses to give it to me as a report that I can share with others. By doing this, it is openly and blatantly violating the spirit of the regulations that require it to provide me a free credit report every year. The other credit information companies are slightly better. One of them requires you to compulsorily download their app to get access to your credit report. So, if you don’t have a smartphone, you cannot get the free credit report. 

The regulator should force the credit information industry to provide this data without harassing consumers. Till it happens, it will be exasperating. Grin and bear it, but ensure that you get your free CIBIL report, despite the hassles. The link for your free report is  https://www.cibil.com/freecreditscore  

The author is a Sebi-registered investment advisor