More people seek credit scores to get better rates

MUMBAI: Credit information bureaus are seeing a surge in people seeking their credit scores as lenders push aggressively into smaller towns. Retail borrowers are becoming more aware that a good credit history helps them to negotiate better rates. These agencies assess creditworthiness for those with no past borrowing history by evaluating their credit card transaction record. Banks have seen a bulk of their growth in lending during the quarterended June coming from small cities and towns. Growth in overall credit was highest in semi-urban branches, at 20 per cent. Growth in bank loans in rural and metropolitan branches stood at 12.5 per cent and 12.4 per cent, respectively. Loans grew 12.6 per cent in urban branches. Credit bureaus on their part are seeing strong growth in the number of individual borrowers seeking credit scores from them, though there are no firm numbers. “Consumer interest in going for credit scores is directly co-related to banking penetration in a particular geography,” said Mohan Jayaraman, MD of Experian Credit Information Company of India . “We are seeing more inquiries coming from consumers in tier-II cities. Our consumer education programmes indicate that the consumer awareness on financial issues is more or less the same as in metros. This was not the case a few years ago.” An early entrant in this business, Credit Information Bureau (Cibil) has launched a product for consumers that assesses their creditworthiness and helps them negotiate interest rates. “We have seen a significant growth in consumers reaching out for reports and scores in metros as well as tier-II and III cities,” said Harshala Chandorkar, senior vice-president , consumer relations, Cibil. “This clearly indicates the rising financial awareness in India,” said Chandorkar. Cibil is confident that this will benefit both the industry and consumers as borrowers become more financially disciplined and aware of the importance of maintaining good credit histories.