In the recent months other entities like insurance firms and telecom companies have also started looking at potential customers’ credit history
A mention of credit score always reminds one of loan applications – their rejection or approval by banks. However, in the recent months other entities like insurance firms and telecom companies have also started looking at potential customers’ credit history to take critical decisions.
The Credit Information Companies Regulation Act (CICRA) permits institutions like banks, insurance companies, telecom companies, broking firms and asset reconstruction companies to access credit information companies’ database.
“If other regulators permit or make it mandatory to check credit history, it may be difficult to buy a motor or health policy. Or, you may have to pay higher premium. Similarly, telecom companies may take a decision on whether or not to grant a connection if the credit score is too low,” explains VN Kulkarni, chief credit counselor with the Bank of India-backed Abhay Credit Counseling Centre.
“Be it banks or any other institution, they are keen to know whether you are capable of paying back your financial obligations or are disciplined enough to make your payments on time. A missed payment or a default account in your credit report can not only reject your loan application, but also portray you in a negative light in front of a prospective employer,” adds Rajiv Raj, co-founder and director, Credit Vidya, a financial literacy and credit counseling firm.
Sure, things are at a nascent stage to make a huge impact on your wallet immediately, still it pays to be prudent.