Mohan Jayaraman, MD, Experian Credit Information Co of India spoke on the role of a credit bureau, understanding credit rating and the consequences of a bad credit score

Moneylife Foundation conducted yet another successful and highly informative seminar on financial literacy. The event, which again witnessed a packed audience, was held at the International Centre, Goa. The first few sessions were conducted by the Moneylife Foundation trustees, Sucheta Dalal and Debashis Basu. Mohan Jayaraman, MD, Experian Credit Information Co of India spoke on the role of a credit bureau, understanding credit rating and the consequences of a bad credit score in a unique session titled ‘Credit Crossroads’.

Even today, many people are unaware about credit bureaus and the way they function. These organizations collate information on an individual's finances and assign a credit score to each person, and this consumer information is provided to banks and other financial agencies. The credit information report is an individual's loan repayment track record. Mr Jayaraman also emphasized the need to maintain a good credit history record by settling repayment matters with banks and lenders on time.

He stressed the importance of having a healthy credit score and how this is assigned. He explained what constitutes a credit history and how one can improve upon his score.

"If you regularly check your credit history, you could spot mistakes in case there are any, and you can contact your bank, or lender, to correct them," he added. He also busted some credit myths and clarified what is not included in a credit report.



In the session he identified several life events that we are likely to face as individuals and how to deal with our finances, especially our credit/ borrowings during those times—for example, if one plans to buy a house with a bank loan. He said one should check out the interest rates of the banks prior to applying and then when one has shortlisted a particular bank he should apply to avoid making multiple ‘enquiries, which could affect the credit score. Mr Jayaraman also focused on life events that are more likely to be faced by women. In the same way he spoke of other different life events like getting married, in case of a serious illness, divorce, etc.

For young students and the youth, he focused on the importance of a credit score when they plan to go ahead with further studies or in their first job. Many apply for an education loan and this becomes the foundation of their credit history; therefore they should manage it carefully.

In case one has been turned down for a loan they should stay calm and find out the reason for rejection. If the lender refuses a loan on account of a low credit score one should apply for a copy of their credit report to see where the fault lies and should try to rectify it immediately.

Mr Jayaraman pointed out that different credit bureaus had different ways of evaluating credit history and assigning scores, but it depended on the banks—how they used the information to grade the viability and reliability of the credit seeker. He underlined the need to settle all matters with banks and other lenders to ensure that the credit history is more accurate.

He said it was necessary to have a good credit history record, as it would help getting a loan easier and also prevent “identity theft”. In the session he also discussed on how one could manage the credit report and get it corrected in case of any error.