The Reserve Bank of India (RBI) has announced that, starting January 2025, banks and NBFCs will report credit data to credit bureaus biweekly instead of monthly. This change aims to improve the timeliness and accuracy of credit information, benefiting both borrowers and lenders.
Key Highlights:
1. Biweekly Credit Reporting: Credit institutions will now update your credit information every 15 days, ensuring faster reflection of repayments or missed payments in your credit report.
2. Impact on Borrowers: With more frequent updates, loan repayments or defaults will reflect sooner, allowing borrowers to improve their credit scores faster. A higher credit score can lead to better loan terms and higher chances of approval for new credit cards or loans. Conversely, any delays or missed payments will quickly affect the borrower’s credit score, making it easier for lenders to assess risks.
3. Impact on Banks/NBFCs: The more frequent data updates help banks and NBFCs make quicker and more informed decisions regarding lending. This also helps identify borrowers applying for multiple loans across institutions and reduces the risk of over-leveraging. Furthermore, it fosters transparency and healthier credit behavior.
4. Better Risk Management: Credit institutions can use updated data to perform more accurate risk assessments and prevent lending to over-leveraged customers, ultimately reducing default rates.
The Future of Credit Reporting:
This transition lays the groundwork for even more frequent updates, such as weekly or real-time reporting, which could further streamline the lending process and enhance credit transparency across the industry.
Stay informed and proactive in managing your credit as the landscape evolves.