Bad credit scores can often be the reason why a bank will reject your loan application. CreditSeva is among the startups trying to remedy this problem.
Two years ago, Sagar, a computer science graduate in Mumbai sought an education loan from a private bank. However, he was rejected because he had no previous credit history. Given that the space has seen a history of bad loans, banks don't sanction them unless backed by a good collateral.
In another case, Rahul was rejected for a home loan because of a poor credit score owing to unpaid dues on a credit card from a private bank. He had not used the card but rather received it from the bank for free. He refused to pay the dues, unaware that it would affect his credit score.
Bad credit scores can often be the reason why a bank will reject your loan application. Among the startups trying to remedy this problem is CreditSeva, a credit platform which claims to help you improve your credit score.
CreditSeva is an integrated platform for “real-time bad loan closures and score improvement” that enables customers to monitor and manage their credit performance through advanced data analytics and integration with financial institutions such as banks, credit bureaus and NBFCs (non-banking financial institutions).
Satya Vishnubhotla, CEO and co-founder, CreditSeva, said, “There is a huge gap in the financial service industry in terms of the demand and supply of loans. CIBIL, the country’s largest credit bureau, quotes as on April last year that there are 350 million credit reports in India and about 200 million users require improvement in their scores. We want to fill that gap. Our target is low-credit score customers and first-time borrowers.”
A credit report is the summary of the credit history of an individual. It simply includes the detailed records of your bill payments. Credit bureaus collect an individual’s credit information and prepare credit reports depending on the obtained information.
A credit score is a three-digit number that explains the creditworthiness of a person. It usually ranges from 300-900 with 300 as the lowest credit score. The higher the score, the higher is the credit-worthiness of an individual and the ability to get a loan. The credit report of an individual helps in determining whether the loan application will be approved or rejected and also decides the loan’s price.
“We use credit advisory tools to give free assistance to customers to rectify errors and close old loans," said Vishnubhotla. "Sometimes if required, customers will be required to take loans against Fixed Deposits or against gold, etc which can help improve the credit score. We will provide this with instant analysis and the customer can get expert advice to improve and maintain your credit score.”
Headquartered in Hyderabad, CreditSeva's history dates back to 2011 when Satya and his co-founder Kalyan Varma met a single mother who could not get an education loan for her daughter who was selected by IIM Calcutta. It started out as an offline advisory firm, went online after two years and now has tie-ups with Kotak Mahindra Bank, Fullerton India, ICICI Bank, DCB Bank and credit bureau firm Experian India.
Later, CreditSeva was launched as an NBFC in March last year by three co-founders to help customers give credit reports online, instant analysis of the report and improve the low scores in 30-180 days.
"We have given 1 lakh plus score cards in the last one year for free. In a bid to improve scores, we charge a fee from banks at 1-5 percent of the transactions done by customers," the CEO said. "We have closed over 3,000 bad loans at various banks for users and about 500 new loans were sanctioned during 2016."
The fintech firm is also testing a premium subscription model starting at Rs 2,999 to give 12 reports and credit score for one year and aims to target the B2B space (corporates) to earn revenues.
The company is funded by Singapore government-backed SGInnovate and Pix Vine Capital (361,000 Singapore dollars or about Rs 2 crore) and other industry executives from Citi Bank, HSBC and Paypal.
"We want to tie-up with 15 banks and financial institutions and 1 million customers by December and next year will expand to markets beyond India," Satya said.
CreditSeva also raised SGD 610,000 as seed funding in 2016 and in the process of closing the next funding round.