New Delhi: By this Diwali, the Credit Bureau of India Limited (CIBIL) will launch a credit score database. This database will consolidate information to help banks and other lenders to decide on the creditworthiness of a borrower in India.

This database will have extensive details about loans and repayment records of borrowers and will prepare a Credit Information Report (CIR) for them. It will also assign a credit score to every borrower. Varying between 300 and 900 this credit score will be the new indicator of a borrower's creditworthiness. The closer one is to the upper limit of this score the more creditworthy will he be.

This database will help the banks tremendously to gauge the credit profile of a borrower and is likely to bring down the interest rates for people with good credit ratings. Till now banks have had no such records or score, and are used to charging the same interest rates from a good borrower and a 'not-so-good' one. "Now, those who have a better score may get loans at lower rates," the MD of CIBIL Arun Thukral said.

CIBIL Chairman S. Santhanakrishnan said, "We have prepared CIRs of over 100 million borrowers, based on their 30-month credit history. Our reports do not indicate whether the borrower is good or bad. It merely compares his creditworthiness and gives details about his credit history. It is up to the lending companies to decide whether the customer is likely to default or not."

Various records and facts pertaining to every borrower like the date of taking the loan, repayment history, age and other demographic factors will be recorded in the database. This database will be upgraded on a monthly basis. Those who haven't taken any loan or don't own a credit card will not have any credit score.

However, to obtain the score directly from CIBIL may take some time. "After the RBI guidelines are out, this would be made possible. If the customer feels that there is a mistake in the data, he would have the right to approach the relevant bank or financial institution and get it changed. They will subsequently inform CIBIL about the change," Thukral added.

CIBIL seems to have take a cue from the American credit rating agencies and come up with a similar credit scoring system provided by Fair Isaac, which is known as a FICO score and lies between 300 and 850. There are three main credit rating agencies in US - Equifax, TransUnion and Experian.

Credit Information Bureau (India) Limited (CIBIL) was incorporated in 2000. It's aim is to fulfill the need of credit granting institutions for comprehensive credit information by collecting, collating and disseminating credit information pertaining to both commercial and consumer borrowers, to a closed user group of Members. Banks, Financial Institutions, Non Banking Financial Companies, Housing Finance Companies and Credit Card Companies use CIBIL’s services.