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How do Credit Bureaus Work?
15th Dec, 2017
Rajesh and Aditya were again together, having some good time watching the T20 between India and West Indies. Even while the Caribbean’s won quite comprehensively, they both were happy as they had seen a good match. However, amidst the cricket talks, the conversation again shifted towards the credit score. Rajesh was indeed happy knowing the procedure to get the credit score in the last conversation. However, he could remember that the bank wasn’t able to find the score from one credit bureau but then finally caught hold of his credit score from another credit bureau. He was just wondering ‘How’ and he instantly knew who will clear his doubts as always.
“Every lender shares loan data with all credit bureaus generally within the first two weeks of each month. Each credit bureau takes its own time processing that information and refreshing it on your credit report and score. Further, it may be possible that the same set of information is processed in a different manner by different credit bureaus. So, it might be possible that one credit bureau missed your information or left it on grounds of being inadequate while the other credit bureau creates your credit history based on that information itself. Also how a credit bureaus searches your data in its own database depends on its own logic – remember Google vs Bing! These are some of the reasons why your record could be missing with one credit bureau but found in another.” Aditya was indeed happy to be Rajesh’s guide.
“Oh, that’s quite complex. But why do banks share my data with credit bureaus? Is my data all secure? It seems like anyone can access my personal data.” As always, Rajesh was still far from being convinced.
“RBI mandates banks to share this data with all 4 credit bureaus in India. The data collected and stored by the credit bureaus is kept under many layers of security. Your personal data and credit score is accessible only to you or to a lender whenever you apply for a new loan.” Aditya was leaving no stone unturned to convince Rajesh.
“Oh, that is good. It is always good to learn something new from you. The match wasn’t good, but this learning will indeed be helpful. I have much more to learn from you, but next time” Rajesh seemed happy now, and needless to say, convinced too.
“Yeah. Let’s keep something for next time. Now, it’s time to enjoy some tea now.”
Aditya moved towards the kitchen to get some biscuits for the tea. Rajesh and Aditya were both smiling.