MUMBAI: Retail borrowers have often felt short-changed by banks in the absence of any lever to negotiate interest rates. This may be about to change, with PaisaBazaar andEquifax tying up to offer free credit scores.
Although individual scores have been available for a fee, borrowers hardly utilised it. Now, just like corporate borrowers, individuals will be able to go to banks and negotiate interest rates on the basis of their credit scores. Like companies with triple-A ratings, individuals with high scores will be able to get the best rates.
At present, borrowers have to pay Rs 400-500 to get their credit score. Credit reports document a person’s credit history and help lenders evaluate whether to lend money and extend credit to an individual and at what rate.
Lending institutions including banks and non-bank finance companies use credit bureaus. Most consumers don’t check their credit eligibility till the time they are in need of a loan. With this partnership, consumers will get to download their credit report free of cost from the PaisaBazaar portal. The venture promises to increase transparency and awareness for consumers on their credit status.
“There is a general lack of credit awareness among consumers in India and nearly 30-40 per cent of loan applications are rejected because of bad credit history,” said Naveen Kukreja, managing director of PaisaBazaar. com. “We expect the partnership to help with customer acquisition and provide cross-selling opportunities in the long run.”
In many cases the consumers’ material facts are not correct. This tieup will help consumers understand their financial standing, scour their credit report for errors and to make those corrections with the credit bureaus.
If the credit score does not meet banks’ cut-off limit, the individual will be denied a loan. Consumers can improve their credit score by various methods such as rectifying mistakes in bank records, improving payment history and closing unused accounts.
“As we start offering this product, we will start getting more aware customers,” said Kukreja. PaisaBazaar gets 2.5 million enquiries and disburses about Rs 1,500 crore in loans every year, in home, personal, auto and credit card segments. The online financial marketplace expects its disbursements to grow toRs 5,000 crore in a year. It sells home loans, personal loans, loans against property and credit cards through the online portal and partners more than 40 financial institutions across different categories.
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