Decoded: What RBI’s new credit information updates mean for borrowers and lenders

Your credit history starts with the opening of a credit line, continues with your credit usage and timeliness of payments, and finally ends with the closure of the credit line.

The RBI has announced a critical change in how credit data is reported by lenders to bureaus. The change should have an impact on the risk-grading practices of lenders, the credit behaviour of borrowers, and to an extent, on how frequently borrowers check their scores. Let’s wade into the weeds and understand how this impacts consumers and how they must adapt to this change.

How reporting works

When you take a loan or a credit card, your lender must report your credit history to credit bureaus such as Cibil and Experian. Your credit history starts with the opening of a credit line, continues with your credit usage and timeliness of payments, and finally ends with the closure of the credit line. The bureau uses these data points to compute your credit score.

Change in reporting frequency

Till now, it was enough to check your credit score once a month. That was the frequency at which the RBI had asked lenders to share credit data with bureaus. Effective January 1, 2025, the RBI wants lenders to report the data at least once a fortnight, on the 15th and the last date of the month. The data should be shared within seven days of the end of the relevant fortnight, and the bureau must ingest the data within five days. A lender can share the data with the bureau at shorter intervals — potentially weekly or daily — if they so choose.

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Your score could change during the month

Earlier, your credit history, and therefore your credit score, would be updated once a month. No matter what you did with your credit card or loan during the month, the impact of your credit behaviour wouldn’t be felt till the monthly updates reached the bureau. Now, your score could potentially change during the month. Indeed, it could change multiple times if the lender and bureau agree on very short update intervals.

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What this means for borrowers

Faster updates are great. Borrowers now have a clear incentive to maintain impeccable credit behaviour through the month. That means ensuring their utilisation isn’t surging out of control and that their payments are always on time. If they have closed a loan recently and are going to borrow again, their creditworthiness would be visible in their credit reports within a fortnight. They won’t have to wait till the end of the cycle to demonstrate that a loan was fully paid off on time. Therefore, their scores could go up during the month. Equally, the impact of late payments and surging utilisation may also appear faster in their reports. Less-than-impeccable credit behaviour would lead to a dip in the score during the month.

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What this means for lenders

The RBI said in its recent statement that lenders "will be able to make better risk assessment of borrowers and also reduce the risk of over-leveraging by borrowers.'' Access to short-term data on the borrower’s credit history would allow them to quickly identify and weed out credit-hungry or high-risk borrowers. The central bank has expressed  much concern about the risks in retail lending. Therefore, more data  would  help lenders meet the RBI’s expectations on risk management.

If there’s a clear takeaway for consumers now, it’s that they must control their credit utilisation, be timely with payments, and check their credit reports more often. The benefits of doing so—and the consequences of failing to do so—will now be felt quickly.