Most borrowers in India are unaware about the fallout of defaulting on loan payments as well as presence of systems to rate their creditworthiness, says a survey.
As many as 91% of the respondents were found to be lacking awareness about the adverse impact of not paying their loan dues, according to Credit Sudhaar, a leading credit health improvement company.
The survey, which covered more than 300 people across 8 cities, also found that nearly 85% of the people did not had any idea about the presence of credit bureaus — entities that maintain database of borrowers & help lenders to check their creditworthiness while giving away loans.
Delhi and Pune led with one out of four respondent being aware of credit bureaus. Besides, Delhi, Bangalore & Pune had more than 10% respondents knowing their score.
Mr. Arun Ramamurthy and Gaurav Wadhwani, Credit Sudhar co-founders said, “The primary objective of conducting the survey was to understand the cause & effect analysis of clients who have been through credit impairments. In other words, we wanted to understand the reasons for unavailability of credit to clients due to negative credit history and a low credit score”
The survey revealed protection of credit as a major concern as none of the respondent had taken any steps to protect their identity from theft.
Moreover, 92 % of respondents were unaware of their credit scores - ratings given by credit bureaus.
Besides, a mere 4 % of the people surveyed had checked their credit scores in last one year and 98 % of respondents could not decipher a sample credit report when they were shown one.
The survey revealed that 91 % of the customers were not aware of the impact of non-payment of credit dues, Ramamurthy and Wadhwani said.
“We feel that a lot of this could have been avoided if they would have been aware of their credit health and the impact of non-payment of credit dues. We also realised during the survey that penetration of professional credit counselling is almost nonexistent in India, which leaves space for presence of credit advisory services” Credit Sudhar co-founders added.
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