The origin of credit scores dates back to the 1960s, prior to which when a lender extended a sum of money to a borrower, it was purely a judgment call. Since then however modern credit reporting has come a long way, with multiple credit bureaus operating both globally as well as in India. If you are even slightly curious about your credit score and what it entails, it is entirely possible that you would have availed of a score or credit report from one of the four credit bureaus (CIBIL, Equifax, Experian, CRIF High Mark) in India.
In developed economies such as the United States of America for instance, the scenario is different. With the levels of awareness regarding credit bureaus being high, the usage is also consequently high. The cost of reports being high initially, regulations that have been put into effect have made the availability of credit reports far easier and therefore free for most consumers. In India as of now, a mere 4 percent of the population is aware of credit reports, as per the findings of an exhaustive survey carried out by Credit Sudhaar, India’s premier credit health management company.
In the United States, the Fair Credit Reporting Act (FCRA) is enacted to promote credit information coverage and dissemination, which includes consumer credit information. An amendment to the FCRA, the Fair and Accurate Credit Transactions Act (FACTA) allows consumers to avail of a free credit report from each of the credit bureaus every twelve months. Hence owing to federal law a consumer is entitled to a free report.
Free scores in developed economies encourage users to keep track of their credit history, which makes managing your credit health significantly easier. This is because the credit history gives the consumer insight into their transactions, both past and present. It can also help reduce the instances of identity theft, as the consumer can report suspicious transactions to the concerned bureau immediately. Typically, most consumers avail of a free report every three months, owing to which they can check their credit report for the entire year basis the availability of these free reports. Currently in India, there is no such regulation and hence bureaus charge a consumer for a credit report.
However, in order to increase awareness and usage, websites such as http://www.freescoreindia.com are making an endeavour to provide free scores, to encourage individuals to understand credit scores better in India.