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Lenders tracking digital data may get you loan without a credit record

Banks are tracking your personal financial data to draw conclusions about your repayment capacity.

, ET Bureau|
Updated: Feb 08, 2016, 09.15 AM IST
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Banks are tracking your personal financial data to draw conclusions about your repayment capacity.
Banks are tracking your personal financial data to draw conclusions about your repayment capacity.
Borrowing has so far been unthinkable for those without a credit history, but this is now set to change. At present, the number of people who don’t have a credit record is higher than those who do. “Banks are tapping other details of their existing customers, who have not borrowed in the past, and checking to see if there is a possibility of lending to them,” said a senior official from the State Bank of India. Lenders are reviewing various data points for these customers, since the lack of credit record may have resulted from the customers choosing not to avail of credit, even though they were eligible for it. Banks are offering easy-to-handle products like personal loans to existing customers. This is also facilitating a faster approval and disbursement process.

A senior official from a leading private bank said lenders are looking up salary account balance, transaction and utility bill payments, among other things. “These data points can help offer a low-ticket loan, like a personal loan or prequalified mortgage loan of say Rs 25-30 lakh,” he added.

Banks are tracking your personal financial data to draw conclusions about your repayment capacity. Under the scanner

As banks have started tracking more than one source to collect information for credit scoring, customers need to be more careful of what their habits indicate about their repayment capability to a possible future lender. This calls for individuals to have a clean track record for payments. Further, any information you put up on social media, your list of friends and connections, and purchase pattern can also allow lenders to draw conclusions. Similarly, your mobile phone bill payment pattern speaks volumes about you.

Exception, not rule
Despite the advancements in this area, credit evaluation using secondary information is still at a nascent stage, says Manavjeet Singh, CEO of Rubique.com, a loan marketplace. “Only the big banks are using this method to lend to their existing customers. At the industry level, most loans are still being offered the old-school way,” he says.

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