CIBIL Admits Issue with Credit Data But Has No Answers on Static Credit Score for Months
TransUnion CIBIL Ltd (CIBIL), the first company to start tracking credit data of individuals in India, has admitted to “an issue with the credit data” that led to a significant reduction in the credit score. Despite this discovery, which Moneylife has been pursuing for several months, CIBIL’s stand is that "all is well" with its systems.
In August 2019, right to information (RTI) activist Girish Mittal had pointed out
, with his own example how CIBIL can mess up the credit score of an individual.
His credit card application was rejected citing low credit score when he had absolutely no default.
"I was in a state of shock because the last time I checked my credit score, in 2018, it was 800 plus, which is classified as excellent credit score. I have 100% record of making timely payments of all bills, credit card and loan dues since beginning of my career, spanning almost 25 years. I have no outstanding loans, delays or defaults. I have cleared all my loans before time. I checked with friends in the credit industry and nobody could point out the exact reason for lowered credit score," he had said.
After repeated efforts to get an explanation from CIBIL, Moneylife received a reply on 3 September 2019 saying, "With reference to the consumer grievance cited, the CIBIL Score change in this particular instance was a result of an issue with the consumer's credit data, which we identified and corrected immediately.
There was no issue in the score computation methodology and change in the score was the result of the data correction...The score is dynamic and will change based on the individual's month-on-month credit activity and payment behaviour."
A similar response was sent to Mr Mittal on 18 September 2019. He was told "...the CIBIL Score change in this particular instance was a result of an issue with the credit data which we identified and corrected immediately. There was no issue in the score computation methodology and change in the score was the result of the data correction."
This did not ring true, because, Mr Mittal’s bank, which was Axis Bank in this instance, does not show any delay or mistake in what it has reported to CIBIL. Yet, Mr Mittal's credit score had dropped from 800 plus to 662 from 800 plus.
He has now received a response from CIBIL saying: “Reference your queries, the CIBIL Score change in this particular instance was a result of an issue with the credit data which we identified and corrected immediately. There was no issue in the score computation methodology and change in the score was the result of the data correction. The quality, accuracy and security of the data we collect and maintain is paramount to us and we continue to enhance our processes, systems and technology to provide reliable solutions and services to our members and consumers”.
That is all very well, but why has CIBIL been dodgy for months? In an email to CIBIL, Mr Mittal has said, “This is the first time you have admitted that there was problem in data at your end, which you have rectified. This is not as if somebody decided to play mischief with my data - there is systemic issue, which could have affected credit scores of thousands of individuals - having disastrous effect on their financial lives!!!”
Credit score is a 3-digit number generated by credit information companies (CICs), in the range of 300 to 900, with 900 being the best, is supposed to decide whether you will get a loan and at what interest rate. Everything like a credit card or a home loan is dependent on your credit score and, hence, it is imperative that the scores are calculated and reported correctly.
CIBIL says the credit score is calculated based on the credit history of an individual over past 24 months. The score is dependent on a combination of factors like credit utilisation; type, amount and duration on credit facilities availed; month-on-month credit payment behaviour; delinquencies and defaults; written-off or settlements on credit facilities and also the credit history on loans guaranteed or co-owned by the consumer. The score is dynamic and will change based on the individual's month-on-month credit activity and payment behaviour, it adds.
However, what Mr Mittal found there was no change in credit scores for months together for him and his wife. He says, “CIBIL says credit score is dynamic and will change month on month with credit consumption and repayment behaviour. My credit score has not been revised since 30 July 2019 and my wife's score has not been revised since May 2019. Again your (CIBIL) statement is full of fallacy and points to errors in your systems and procedures.”
In his previous article
, Mr Mittal has raised the issue of free credit report per year that would be provided by credit ratings agencies. A circular issued by the Reserve Bank of India (RBI) with number DBR.CID.BC.No.11/20.16.042/2016-17 dated 1 September 2016 mandates CICs like CIBIL to give one credit report annually to individuals annually in the same manner it is given to lenders. The lenders get downloadable copy of credit information report, however, CIBIL consistently refuses to give the report in downloadable format, the way it is available to lenders, he had said.
However, till date, according to Mr Mittal, CIBIL continues to provide only credit score and not the report. In his email to CIBIL, he says, “You have not given any response on your not following RBI directions on giving pdf report once a year to all the users !!! You just provide credit score, not credit report as mandated by RBI!”
Credit score only provides only the ranking based on your credit history between a range of 300 and 900. On the other hand, a credit report provides all details related with credit, repayments, delays and defaults of the individual.
We have sent an email to senior officials of TransUnion CIBIL. We will update this story as and when we receive a response from them.