Your credit score may fail you, even if you've played by the rules

Time of India

17-07-2025

A three-digit number between 300 and 900 holds disproportionate power over Indian lives today. It can decide if you get a home loan, a credit card, a job, or even access to the healthcare provider of your choice. The catch? It's often wildly inaccurate, difficult to contest, and largely beyond your control.
Credit scores, designed to measure how risky you are as a borrower, are compiled by four
credit information bureaus
(CIBs) in India:
TransUnion CIBIL
, Experian, Equifax, and CRIF High Mark. They crunch data based on your credit history, things like repayment track record, the amount of credit you use, how long you've used it, and your credit mix.
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But here's the thing: as more people interact with the system, many are discovering just how little they understand, or can influence, the score that shapes critical parts of their financial and professional life. And worse, how opaque and error-ridden the system really is.
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From loans to jobs to hospitals
Credit scores were once used only by banks. That's changing. Employers now use them to judge reliability. So do landlords. Some service providers might soon follow. In Switzerland, for instance, dentists routinely check uninsured patients' scores before offering treatment. That future might not be far off in India.
At the same time, complaints are piling up, about phantom loans, unexplained dips in scores, and dispute processes that drag on for months with no resolution. A Bengaluru court recently awarded ₹1 lakh in damages to a consumer after delays in fixing an erroneous score. But that's an exception. Most people have little recourse.
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One such case: S Mukherjee, who says a ₹50 late fee, wrongly charged and contested, lingered on his record for over a decade, eventually tanking a home loan application. He paid ₹900 to make the issue go away and bring his
CIBIL score
back up.
Inside a black box
Credit bureaus insist the problem isn't with them, but with the data they get from lenders. 'The data in credit reports is provided to us by credit institutions,' says Bhavesh Jain, MD & CEO of TransUnion CIBIL. 'Updates or corrections can only be made after the institution concerned validates and confirms the change. Credit bureaus are not authorised to make any changes independently.'
That's cold comfort for users stuck in bureaucratic ping-pong. Member of Parliament Karti Chidambaram recently flagged this in Parliament, saying the system needs deep reform. 'There must be greater transparency,' he said. 'The government has missed out on an opportunity to make life easier by reforming these things instead of tinkering in the margins.'
TransUnion CIBIL bears the brunt of the backlash, in part because it dominates the Indian market and is often the only bureau consumers have heard of. But the underlying issue is industry-wide.
What the RBI is trying to fix
Since January, the
Reserve Bank of India
has tried to improve things. It now requires lenders to update credit records every 15 days instead of monthly, with penalties for delays. This, Jain says, should lead to quicker
dispute resolution
.
Others are upgrading their systems too. Ramkumar Gunasekaran of CRIF High Mark says his bureau has added a new system for tracking disputes, and that complaints have fallen slightly over the past three months. But he admits it's too early to say whether that's because of RBI's changes or just coincidence.
Still, the structure of the system remains flawed. Bureaus are entirely dependent on what lenders tell them. Algorithms aren't publicly explained. And while consumers have the right to file disputes, most don't know how, or even that they can.
Poor score? Blame the system, not yourself
The consequences go well beyond missed loans. A Madras High Court ruling recently backed SBI's decision to revoke a job offer based on poor credit history, saying financial discipline is a valid criterion for employment.
That's despite the fact that credit scores are not actually comprehensive indicators of financial health. 'They do not account for income stability, savings, or asset ownership,' says Manish Jain, MD & CEO of Experian.
In fact, even the wealthy can get caught out. Zerodha founder Nithin Kamath recently shared that his score was below 750, despite being a billionaire.
Credit monitoring
is on the rise, especially among younger consumers. Experian says monitoring activity rose 51% in FY24. The bureau has added more access points for dispute resolution and made its escalation process more transparent, Jain says.
Meanwhile, RBI is exploring a unique borrower ID system to reduce identity mismatches. Experian says it already uses 'rigorous validation rules' for all submitted data.
But fundamentally, we're still dealing with a powerful scoring system built on imperfect information and limited accountability. Bureaus say they want to build more inclusive models. But that will take more than intention—it'll take structural change.
A broken system, a decades-long nightmare
One professional, who asked not to be named, summed up the dysfunction in a personal account:
'In 2002, I got a credit card that promised zero commission at petrol pumps. That turned out to be false, so I paid off the dues and stopped using it. A year later, I started getting calls saying I hadn't paid. A charge under ₹100 had ballooned to over ₹1,000. No one could explain why.
For 23 years, I've had over 1,000 calls asking me to clear it. Not once was I shown proof of default. CIBIL never informed me of the downgrade. I've had multiple credit cards, taken two home loans—always paid on time. Still, the CIBIL issue pops up.
Once, an HDFC loan officer said: 'Don't worry, we ignore such downgrades.' That's how arbitrary this system is.'
With inputs from TOI