Despite RBI's instructions, credit bureaus cut borrowers' scores

Use finance options to your advantage | Learn how to use credit and debt. Picking up a property mortgage that you can definitely pay off and then earn more out of whether from rental or sale is one such bet. They key is to know your limits and plan accordingly. For credit cards, pay the balance and earn cash backs or points – whatever bank’s terms are. These can then be used for other purchases. (Image Source: Reuters)

Credit informations are lowering borrowers' credit scores despite instructions from the Reserve Bank of India (RBI) against taking such measures.

Businessman Annuj Nigam told Mint that, after he had availed the moratorium in March, his credit score was cut by over 100 points.

"I figured out that while banks have not reported my repayment as 'delayed' to credit information firms, non-bank lenders have done so in April," Nigam told the paper.

Dozens of borrowers have raised similar grievances on Twitter, the report added.

Moneycontrol could not independently verify the story.

A credit score determines the creditworthiness of a borrower, influences banks' decisions to give loans to borrowers and can even determine the interest rate.

While companies do typically change credit scores after defaults or delays in loan repayments, the central bank had asked credit bureaus to avoid taking steps that adversely impact borrowers' credit history. The measure was intended to provide relief during the COVID-19 pandemic.

"We would... like to confirm that there has been no change/modification in the reporting formats or reporting by credit institutions which will put the consumers who have availed moratorium in a disadvantageous position. We have been engaging extensively with lending institutions to ensure timely and accurate data reporting," TransUnion Cibil told Mint in an emailed statement.

A 35-year-old from Mangaluru told the publication that his loan and credit card dues were under the moratorium till 31 August, but his credit score has been slashed.

"I have mailed the lenders for an explanation, but I am quite confused about how this could happen despite clear instructions from RBI. I was told I will have to pay interest due to the deferment, but the lowering of credit score is simply unjust," the borrower said.