The Credit Information Bureau (India) Ltd (Cibil), the country’s first and largest credit bureau, and international partner TransUnion have launched of the latest version of the credit score, CIBIL TransUnion Score 2.0.
The new score is aimed at improving the prediction of risk and also driving inclusive financing. This is expected to increase credit penetration in the country. “The new model has been customised keeping in mind the changing Indian market and consumer behaviour,” said Arun Thukral, managing director, Cibil. So much for banks. What about customers?
For new borrowers: For borrowers with less credit history of six months or lower, there are few changes. One, even they will get a score. Second, unlike the existing credit score, which is in the range of 300-900, new borrowers will be accorded a risk index numerical value ranging from 1 to 5.
Parameters: The parameters that are taken into account to give the index score include delinquency (90 days overdue), credit seeking activity (number of loan enquiries you make), type of credit (secured or unsecured) and demographics (age and the like) to name a few. An index of 1 denotes the highest risk and 5 the lowest.
What this means: If you are a new borrower, be careful to always pay your bills on time and don’t make unnecessary loan enquiries.
This might give you a lower index (meaning higher risk) and hence, it might make it difficult for you to get a loan when you genuinely require it.
Old score Vs new score: For borrowers with more than six months of credit history, the old scoring criteria 300-900 remains, but for the lower score you get. For instance, the old score of 751-800 will be equal to 662-697 in the present one.
However, you need not panic. A lower score would not mean a poorer credit history. It just means that the banks will have to adjust their score as per the new score. “The new score will be available to banks as of now, and as and when all banks come on to the new score model, even consumer will get the new score,” said Thurkal. This should be in the near future. The price for the new score will be same as the old score