India Inc is building up on the credit tracking mechanism. There are 4 credit rating agencies (CRISIL, ICRA, CARE & Fitch ratings) which work with banks and credit card companies to develop your credit history. This in turn is used to determine your credit worthiness, when you are looking for more credit like a personal loan or a home loan. Until now the credit history is limited to bounced cheques, missed EMI’s and missed credit card payments.
Now, add missed telephone bill to that list. This is something prevalent in the western countries. There is something called a credit score based on which consumers credit worthiness is decided. How the hell did that sub-prime crisis happen then? That’s another story but loans were given to people who did not have a good credit history at higher interest rates. That was feeding the greed of the banks.
All the major telecom service providers in the country — BSNL, Vodafone and Airtel — are now in discussions with CIBIL for sharing of customer database. CIBIL’s Managing Director, Mr Arun Thukral, said, “We are in discussions with all the telecom service providers for sharing the database.” (Business Line)
Of close to 450 million telephone subscribers around 420 million are mobile phones. Of which 90% are pre-paid customers. That leaves us with 10% of 420 million + the landline customers. What we are talking about is some 60 – 70 million users. Is that a lot? Its not. But that is a database nevertheless.
It would be a good start for the banks as well. Now, they know who the credit worthy customer is. Which would mean we will not have a sub-prime crisis.
What if I have missed paying couple of phone bills? It would be difficult to a deny a loan to you. That would mean denying it to a lot of people. Which would put the banks out of business. What it could mean is, you might not get as much loan (18 lakhs instead of 20 lakhs) or banks would charge an higher interest rate.
On the lighter side, there will be lesser phone calls from the tele-marketers.
PS: What’s next for the credit rating? Utility bills? Rent?
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Hey guys, Cibil is now giving credit information report on demand says cardBhai and he has also uploaded the form so we can also use it.. great news..
http://www.cardbhai.com/2009/08/cibil-credit-report-on-demand-available.html
In my opinion, what is the need to take a loan ?
Loan is a media driven event. There is a pattern to everything that we read these days. In the same newspapers, various assets classes are repeatedly hailed and criticized within a short duration. Remember the hype that was created by national newspapers when the real estate was at its highest point. That it would forever grow , that loan is best to build asset, buy a house now etc. Now you would see that hype out of picture and people are told to stock up on equities . Gullible people who have a tendency to do everything as told be experts such as their fathers, teachers , bosses etc. lap up these things and ultimately begin being victims of them .
Now one day we are told about benefits of Credit cards , one day we are told about the risks and now we are told day after day about usefulness of loan personal, home and auto . I have to say that I have used credit cards, took auto loans but the relationship was always business with the banks. Now instead of falling in loan trap , I have started saving and investing . Even if someone is profiling me , it does not matter because I would probably will not go for a new loan which stretches my limit. I have been staying in rented accomodation from last 10 years to avoid taking home loan.
But also I feel that our personal information is sold like hot cakes between these companies without us having any knowledge. We have to find out who is authorized to release our information and whether we are aware of it .
Without good security of private information , there is no check on what one entities know about my personal life and what I do ?
It sounds very logical when everyone is building a database on us but it should be done only when I have approached bank for a loan and they should tell me where they are seeking information from us . Otherwise it is a big brother on us.
Call it shameless promotion but that’s the reason why I have built the site isdueon.com! :) But seriously, when you have scores of bills to pay every month and they are not on auto pay or some standing instructions mode, its easy to forget paying some bills.
It actually makes sense that credit rating companies are considering including phone bills in deciding a person’s credit worthiness. Mobile bills can actually give a lot of details about a person. A person with a heavy bill every month is can actually be of a higher profile than a person will lesser bill every month. And if a person is paying bills regularly, then sure he/she is a better prospective customer.