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In today’s credit-driven world, your ability to borrow money depends on a single number—your credit score. In India, this score is primarily represented by your CIBIL score, a three-digit figure that reflects your borrowing and repayment history with financial institutions. This number is crucial in determining your loan eligibility, interest rates, and the amount you're offered for home loans, personal loans, or credit cards.
However, many borrowers fail to realise that delays in updating their credit information can significantly impact their CIBIL score. This slow credit score update frequency can hinder loan approvals and restrict financial opportunities. Understanding how your CIBIL score works and the effects of delayed updates is essential. Recent reforms introduced by the Reserve Bank of India (RBI) aim to help you protect and improve your credit profile.
Your CIBIL score, ranging from 300 to 900, reflects your reliability as a borrower. A score above 750 signals low risk to lenders, often leading to better loan terms, while scores below 685 may result in loan rejections or higher interest rates. CIBIL (Credit Information Bureau India Limited) calculates this score based on your credit history from banks, NBFCs, and credit card companies.
Your CIBIL score is crucial in determining your financial health and borrowing power. Here’s how your CIBIL score is calculated and the factors that influence it:
Payment History (35%): Timely payments on EMIs, credit cards, and loans boost your score, while missed payments or defaults lower it significantly.
Credit Utilisation Ratio (30%): This measures the percentage of your available credit you’re using; keeping it below 30% shows responsible credit management.
Credit Mix and Duration (15%): A mix of secured and unsecured loans, along with a longer credit history, helps improve your score.
New Credit Applications (10-15%): Frequent applications for new credit can lower your score, as they may indicate financial strain.
Total Number of Accounts (10%): A diverse range of active credit accounts in good standing demonstrates your ability to manage credit effectively.
A high CIBIL score unlocks better loan terms, lower interest rates, and higher amounts, while a low score limits borrowing options and increases costs.
Delays in credit score updates can create issues, even if your credit habits improve. Banks and NBFCs previously submitted data monthly, often taking 30-45 days or more. This delay meant positive changes, like clearing a loan or paying off dues, didn’t show up right away. As a result, borrowers might face inaccurate assessments, affecting loan approvals or interest rates until the updates reflect in the credit report.
Here’s how delayed CIBIL score updates can affect your financial opportunities and create hurdles in accessing credit when you need it most:
Lenders may reject your loan application if outdated reports still show unpaid dues, even after you have cleared them
Missing repayment updates can make lenders view you as risky, leading to higher interest rates on loans and credit cards
Closed loans sometimes continue to appear as active, which unfairly damages your credit profile for months
Correcting errors takes longer when updates are delayed, leaving you stressed and missing financial opportunities
Many borrowers report that their CIBIL reports showed negative records for months after defaults or loans were cleared, blocking access to urgent funds
To tackle the issues caused by delayed credit updates, the Reserve Bank of India (RBI) has introduced a significant reform. Starting from January 2025, banks and credit bureaus will be required to update credit information every 15 days, rather than the previous monthly or longer intervals. This change ensures credit reports reflect updated data, letting borrowers see the immediate effects of repayments or any changes in their credit profile. The reform speeds up and improves credit reporting, benefiting borrowers with fairer assessments and lenders with more informed lending decisions.
Here’s how the shift to fortnightly credit reporting can benefit borrowers by providing quicker updates and more accurate assessments for loan approvals and credit scoring:
Positive credit actions, like payments and closures, will be reflected more quickly, allowing credit scores to improve sooner
Lenders will receive up-to-date reports, making loan approvals faster and more efficient
India aligns with global standards by adopting more frequent credit report updates, improving market confidence
Borrowers will be assessed based on real-time data, reducing the risk of rejection due to outdated credit information
While the reform is a positive step, challenges with legacy data or errors may still require time to resolve
Here’s how you can protect and improve your CIBIL score while waiting for update delays to be resolved:
Check your credit report every quarter, or more often if applying for a loan, to spot and correct errors quickly.
Save receipts, bank statements, and closure certificates as proof of payments and loan settlements, helpful for disputing any inaccuracies.
If updates like repayments or loan closures are delayed, report the issue via your credit bureau’s website or app within 15 days.
Pay your bills and EMIs on time, keep credit usage under 30%, avoid multiple applications, and maintain a balanced credit mix.
Since CIBIL only reflects data from lenders, ensure your bank or NBFC promptly reports any changes to your credit status.
In conclusion, understanding your CIBIL score and staying proactive with credit report monitoring is key to maintaining a healthy credit profile. With the RBI’s fortnightly reporting reforms, accurate updates will become more frequent, but it's crucial to keep track of payments, dispute errors promptly, and follow good credit habits to protect and improve your score.
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