Credit score ups consumer awareness

We have been selling credit information report to consumers since 2009. However,after receiving feedbacks from many of them urging us to provide credit scores along with the report,we decided to go ahead with demand. The company was already selling credit scores of consumers to banks,and now we have extended the facility,in tie-up with TransUnion,to individuals as well.

What is the significance of a credit score for a consumer?

The Cibil TransUnion Score is a three-digit numeric summary of an individuals credit history. The score is derived by using the details found in the Accounts and Enquiries sections on the credit information report and ranges from 300 to 900 points. The closer the individuals score is to 900 the more favourable the loan application will be viewed by a credit institution. The score plays a critical role in the loan approval process.

Is the score reflective of the past loan repayment record of a customer?

Yes. And it provides a lender with an indication of the probability of default of the individual based on his/her credit history. What this means is that the score tells a credit institution how likely the individual is to pay back a loan (should the credit institution choose to sanction the loan) based on the individuals past pattern of credit usage and loan repayment behaviour.

Credit information report is available at a cost of Rs 142. However,along with the credit score the report costs Rs 450. Dont you think it is priced higher?

Internationally,the cost to access credit information report comes to about $10 while we are charging about $2. Similarly,charges for credit score are much higher in other countries. The report and the score are technology driven and its a long process to arrive at the score. It needs a special algorithm to calculate the three-digit credit score and that involves huge cost. Hence,the cost has been kept at Rs 450.

Has this score been tested?

Yes,the score has been tested throughout the development process. Subsequently Cibil and TransUnion have validated the score with several large financial institutions in India. The results have all proven to be positive. The data used to develop the score was taken from Cibils consumer database. The sample contained millions of consumer records and was a representative sample of the population at Cibil.

What are the major factors that affect an individuals credit score?

There are four major factors that affect an individuals score such as late payments or defaults in the recent past,high utilisation of credit limits,higher percentage of credit cards or personal loans (commonly known as unsecured loans),and being credit hungry. If the individual has made many applications for loans,or have recently been sanctioned new credit facilities,a lender is likely to view the individuals application with caution. This credit hungry behaviour indicates that the debt burden is likely to,or has increased and the individual is less capable of honouring any additional debt and hence will negatively impact the credit score.