Credit Score: In today’s world, credit scores play a vital role in obtaining loans and credit cards, yet the previous monthly update system often led to inconveniences. The RBI has now proposed draft guidelines that mandate weekly updates starting April 1, 2026. This change will provide immediate recognition for timely payments and offer quick assistance to those with lower scores.
Drawbacks of the old system
In the past, banks and NBFCs would report data to credit bureaus on a monthly or bi-weekly basis, resulting in scores lagging by 30-45 days after paying EMIs or settling a loan. This delay hindered loan approvals and resulted in higher interest rates. Often, loans were denied without explanation due to the bureaus lacking current information. The RBI emphasizes that real-time data is crucial for effective credit underwriting.
How will the new rule work?
Under the new guidelines, banks will transmit incremental data on the 7th, 14th, 21st, 28th, and the last day of each month, focusing solely on changes like new loans, closed accounts, EMI payments, cleared values, or changes in asset classification. The complete monthly report must be submitted by the 3rd of the subsequent month. Credit Information Companies (CICs) will promptly update this information, refreshing scores within 7 days. Banks will need to adhere to standardized validation rules to minimize data rejections.
Who will benefit the most?
Individuals who have recently paid off their loans or settled their credit card bills will notice a quicker improvement in their scores, facilitating easier access to new loans or credit cards. Interest rates may also drop, as banks will base their decisions on the most current data. There will be special advantages for credit builders, students, or small businesses: Planning becomes more manageable with weekly updates instead of waiting. However, the repercussions of poor payment habits will also become apparent more quickly.