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Should Credit Bureaus Update Scores On Real-Time Basis?

How credit worthy is the Malayalee! Obviously, with banks depending on credit information bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF High Mark, Keralites are just not satisfied with their own creditworthiness. This has seen many flocking to private lending agencies like Muthoot Finance, Muthoot Fincorp, Manappuram Finance etc. These private agencies offer their services at much higher interest rates but with less intensive scrutiny and speedy disposal of applications. Experts here say that lack of creditworthiness is also used as a ruse by banks to dissuade current account holders from moving over to other banks with better offers. Recently, a case surfaced of an individual who applied for a housing loan. The application was rejected for want of the required credit score. On close scrutiny, it was revealed that the applicant had earlier taken a two-wheeler loan which was finally settled. But before closing the loan, the loanee had defaulted once which was settled, including meeting the penalty. This is a clear case of the credit information bureaus not updating its stats on a real-time basis and thus depriving an applicant of a housing loan. In this case who is at fault? This has been just one of the many cases highlighted by the Kerala media in recent times. Perhaps, it was because of such news reports that the senior-most Deputy Governor of the RBI, M Rajeshwar Rao, was prompted to say at a conference organised by CIBIL that “We must aspire to have more frequent updates. Real-time or near real-time credit reporting will improve underwriting precision, enable timely reflection of borrower actions like loan closures or repayments and deliver a superior experience.” Sure, all this will entail additional costs because of investments in technology but the benefits will far outweigh the cost.