CIBIL score speaks about your financial hygiene
RBI’s 2025 guidelines for CIBIL score management issued a few days back are a significant step toward enhancing consumer empowerment and financial transparency.
Sajjad Bazaz
A lady entrepreneur approached a bank as her Mudra loan application was approved by a sponsoring agency for a financial assistance of Rs. 10 lakhs. Her project was found productive and the agency forwarded the sanction letter to the nearest branch of her business address. The lady was instructed by the sponsoring agency to contact the bank branch for disbursement of the loan – term loan and working capital facilities. The bank also intimated her about the loan sanction and asked her to present herself at the bank branch for completing some formalities before the loan is disbursed. With great enthusiasm, the lady approached the bank, but received a shock when she was told that her loan couldn’t be processed for disbursement. Her CIBIL score was very low. On enquiring about the cause of her low CIBIL score, she found a disturbing fact.
Actually, a decade back she had obtained a car loan from a new generation private bank. She was paying her EMI as per the repayment schedule. But midway of the loan, she disposed off the car and the rest of the repayment was passed on to the buyer of the car. The buyer had defaulted in loan repayment. He had entered into a loan settlement agreement with the bank and adjusted the loan after getting an interest rebate. Since the loan was in the name of the lady, her CIBIL score had captured the loan settlement and resulted in the low CIBIL score. Even as she approached the bank (car loan financier) to get her CIBIL score rectified as she had sold the car and moreover the loan was repaid, the bank asked her to repay amount given in the shape of interest rebate at the time of settlement of the loan. That was the only solution to erase the loan settlement information from her credit information report which had affected her CIBIL score.
The story is self explanatory in the sense that there are different reasons which can bring your CIBIL score down leaving you ineligible for a loan facility. Even with a clean record of loan repayment, your healthy CIBIL score is not guaranteed. Basically, in the age of advanced technology integrated into the financial system, it is imperative to observe complete financial discipline, otherwise any minor laxity in maintaining financial hygiene can debar you in accessing funds through loan schemes.
To be precise, credit history, technically known as credit score, of a borrower is the key to unlock future loan facilities. Here, awareness about credit score, commonly referred as CIBIL score makes sense. In the context of J&K, most of the people are unaware that their credit history is at the fingertips of any bank or financial institution. They are unaware that their financial hygiene especially while obtaining loans and repayment of these loans earns them credit scores which are precisely defined as good or bad scores.
So, it’s the lack of financial awareness among people here which is a concern. Otherwise, the primary responsibility rests with the financial institutions to make their customers aware about the nature and impact of financial transactions of whatever nature they conduct at their outlets. The awareness has not to be confined to the products and services they offer, but it has to be broad based. They have to regularly update their customers about the changing landscape so that total financial discipline in line with the envisaged rules and regulations is observed by them. Nevertheless, a financially disciplined customer is a golden asset for the banks/financial institutions.
What is a credit score?
It’s basically a number summed up on the basis of a credit report – a summary of the borrower’s past and current borrowing and his/her repayment history. This report is prepared by a credit bureau agency. If a borrower has been regular with his/her loan repayments, credit score is likely to be higher. Precisely, this credit score reveals the borrower’s repayment capacity and even helps the banks and financial institutions to assess the chances of the borrower defaulting on the loan.
When we think of credit scores, mentioning the Credit Information Bureau (India) Limited (CIBIL) is inevitable. CIBIL, mostly referred to in credit scores, is an agency that provides the credit score and report on an individual’s payments pertaining to loans and credit cards. It’s this CIBIL score which shows borrowers’ creditworthiness and indicates the probability of a default on the basis of their credit history.
Remarkably, there are other credit bureaus, namely , Equifax, Experian and CRIF High Mark. It is these credit information bureaus that generate credit reports.
How to earn a good credit score?
In the given financial landscape and the stringent lending scenario, it’s inevitable for borrowers to maintain a financial discipline of highest order to register themselves with high credit scores. They should utilize the loan limit efficiently without diverting the funds from the core activity for which the loan has been sanctioned/disbursed. After availing the loan, they have to make sure that they pay their loans installments well on time. If they own a credit card, then let them pay the bills in full one time, rather than making a due payment every time. It’s equally important for them to be a guarantor for only those people whom they consider creditworthy. Never allow your cheques to bounce when presented at the bank counter.
Precisely, it’s in the fitness of the things to exhibit a safe appetite for loans and display good financial discipline to earn a good credit score.
What are the latest Reserve Bank of India (RBI) guidelines in this regard?
The Reserve Bank of India (RBI) implemented a series of robust guidelines in 2025 to enhance the transparency and efficiency of CIBIL score management. These reforms aim to empower individuals by ensuring quicker updates, prompt notifications, and improved accessibility to their credit history. By understanding these changes, borrowers can make well-informed financial choices and exercise greater control over their credit health.
Here are the key changes announced by the RBI just a few days back:
- Faster Updates: CIBIL Scores will now be updated every 15 days, ensuring quicker insights into credit behaviour and activities. This quick update system will allow borrowers to monitor their financial performance in near-real-time. Previously, these scores were updated only once a month
- Monthly Information Sharing:
Credit institutions are now required to share consumers’ financial activities with Credit Information Companies (CICs) every month. This ensures credit reports are accurate and up-to-date, providing consumers with reliable data to track their financial health. - Enhancing Transparency with Timely Notifications:
Credit Report Access Alerts: Consumers will receive email or SMS alerts whenever a lender accesses their credit report. This ensures they are aware of who is reviewing their financial information.
Default Notifications: Borrowers will now receive prior notifications before being labelled as defaulters. These alerts will be sent via email or SMS, offering an opportunity to address repayment issues proactively.
These measures promote trust between borrowers and lenders and encourage consumers to stay informed about their financial status.
So, the RBI’s 2025 guidelines for CIBIL score management are a significant step toward enhancing consumer empowerment and financial transparency. By introducing faster updates, timely notifications, and improved data sharing, the RBI aims to protect borrowers’ interests and promote better credit health.
(The author is Editor-in-Chief Straight Talk Communications. He can be mailed at sajjadbazaz@straight-talk-communications.com)
