Usually maintaining a good credit score is crucial for obtaining bank loans and those failing to maintain optimum score are likely to be turned down. It will now become even more crucial for individuals to maintain good credit score. Some banks, which have already linked Reserve Bank of India's external benchmark regime, look to utilize third party credit score to offer different interest rates on retail loans to potential buyers.
According to the report, at least three public sector banks Bank of Baroda, Union Bank of india and Syndicate Bank-have taken steps to segregate retail loans on the basis of third-party credit score. Customers who have a high credit score (above 760 out of 900) will pay at least one per cent less interest compared to people with a credit score of between 675 and 724. Customers with a credit score below 675 are unlikely to secure any loans.
The report goes on to suggest that customers with credit score above 760 will have to pay an interest rate of 8.1 per cent at Bank of Baroda while those maintaining in the range of 675-724 will have to pay an interest of 9.1 per cent.