The Reserve Bank of India (RBI) has come up with new rules concerning CIBIL scores which will come into effect on January 1, 2025. The basic objective of these new rules is to bring about a change in the Indian credit system for the better in terms of transparency, accuracy, and fairness. The new rules will be a boon to the borrowers as they will have a clear idea of their credit position and thus will be able to get loans more easily and quickly.
What is a CIBIL score?
A CIBIL score is a three-digit number that lies between 300 and 900. It is an instrument used by banks and the financial institutions in general, to gauge the creditworthiness of an individual. The higher one’s score the better the chances of getting loans, credit cards, and even in some cases getting jobs.
Key Changes in 2025
The new regulations will require the lenders to tell the borrowers when their loan application is being delayed or rejected if the reason is a low credit score. Now a borrower having a bad credit score will get a grace period of 30 days to point out and rectify any mistake in the credit report before the lender takes a credit decision. This is very helpful as the person can then correct the mistakes and as a result of that his/her score may get improved.
One of the major modifications is the more frequent refreshing of the CIBIL reports which will be a great help in reducing the delays along with the outdated information, thus ensuring that the recent payments and credits are quickly reflected and the score is made more accurate.
Moreover, the automatic rejection of loan applications, with the sole reason being the credit score, is also prohibited henceforth. The lenders are required to perform a manual review of the loan application before rejecting it. This change is quite good for the borrowers as it will not allow them to be treated unfairly and at the same time it will also promote the lenders to be more responsible in their practices.
Better Dispute Resolution
Furthermore, the RBI has ordered the credit bureaus to enhance the dispute resolution process they follow. Whenever a borrower claims that the report contains mistakes, those mistakes have to be rectified in a specified period of time. The borrowers will not thus be the victims of the situation where they are helped with the wrong credits for several months.
Final Thoughts
The new rules in regard to CIBIL scores for 2025 represent a significant move towards the direction of lending power to borrowers and promoting financial equity. In a way, the RBI is empowering people to take charge of their credit health by making the system more open and responsive. These changes translate into less shock and more chances, whether you are seeking a home loan, car loan, or personal credit.
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