New Credit Reporting rules: The first thing that banks or financial institutions see for loan is your credit report and credit score. But, have you ever wondered how the bank knows how many loans are running on you, whether you have filled EMI on time or not, whether you defaulted on a loan or not. The answer is the Credit Reporting System of the Reserve Bank of India (RBI)
Rbi The credit reporting system of the country is continuously working to make the system more transparent and accurate. For this, ‘Credit Information Reporting Directs, 2025’ has been released. Under these guidelines, banks and financial institutions will now have to send information about borrowers to the credit bureau twice every month, till 7 and 22nd.
In Microsave Consulting, BFSI lead Shubha Bhanu says that the frequent update will reduce the blind spot in the data and the decisions related to the borrowing will become more responsible. Let us know how your credit report is prepared and what has been the effect of the new credit reporting system.
Impact of new credit reporting system
- Until earlier, credit data was updated only once a month, causing loan data to remain old for 30 to 40 days. The new system will provide information about repair and default close to real time, which will help banks in better risk evaluation.
- All credit information companies (CICs) will now have to adopt a uniform score range (300–900). This has made it easier to understand the credibility of the borrower.
- Now the data of every borrower is linked to the Government ID (PAN, Passport, Voter ID etc.). This includes all open/close loans, defaults, legal matters and responsibilities of guarantor.
- CIC will now be able to give credit data to non-licenses also obtained, provided that the borrower has clear permission. However, stringent data safety standards will be applicable for this.
According to experts, banks will have to improve their IT systems and processions with new guidelines. But it will have far-reaching benefits- accountable loan system, low default and more accurate loan evaluation.
What is a credit report and how is it ready?
The credit report records complete information related to the loan and credit of a person or institution. This includes information like loan, credit card usage, regularity of payment, default, overdue, and credit score.
This report is prepared based on the information that banks or other financial institutions give to the Credit Bureau. It helps to test the creditworthiness of the borrower before giving a loan.
Also read: ITR Filing 2025: Is your PAN closed anywhere? How will you know, what is the way to resume