119 million Indians actively monitoring their credit scores: Report
A recent report by TransUnion CIBIL, a leading credit information agency, reveals that as of March 2024, approximately 119 million Indians were actively tracking their CIBIL scores. The study titled 'Empowering Financial Freedom: The Rise of Credit Self-Monitoring in India,' provides insights into the country's evolving credit behavior. It highlights a significant shift in this behavior among young borrowers, including Gen Z and millennials.
Young Indians driving credit revolution
The report indicates that a staggering 77% of the 119 million credit-monitoring consumers are Gen Z and millennials. Rajesh Kumar, Managing Director and CEO of TransUnion CIBIL, stated that "this early adoption indicates that these generations will play a pivotal role in shaping India's consumer credit landscape." He further noted that by embracing credit at an earlier stage, younger Indians are recognizing the importance of establishing a strong credit foundation for long-term financial success.
Significant surge in credit awareness
The report also reveals a significant surge in credit awareness, with a 51% year-on-year (YoY) increase in consumers monitoring their credit profiles in 2023-24. This translates to an additional 43.6 million individuals taking a proactive approach to understanding their credit status. The rise in credit score awareness is attributed to the ease of digital access, which has simplified the process for individuals to understand and monitor their scores.
Active credit score monitoring linked to better credit health
Consumers who actively monitor their scores tend to have greater average scores, with a difference of 17 points (729 v/s 712) in comparison to those who do not. This indicates that credit awareness and engagement are linked to better credit health. Among those who checked their credit score for the financial year ended March 2024, 28% are up to 25 years of age while those between the ages of 26 and 35 years form the largest group checking their scores.
Men dominate credit monitoring in India
The report shows that men dominate credit monitoring, with 82% of consumers while women make up 18%. Despite the substantial gender gap, the rising involvement of women in credit monitoring signals a promising trend of improved financial engagement and empowerment among female financial consumers. Interestingly, 46% of those who checked their scores showed improvement soon after, surpassing the 41% improvement rate among non-monitoring consumers.
Credit score monitoring boosts new credit lines
The report also reveals a significant correlation between credit score monitoring and opening new credit lines. Within three months of checking their score, self-monitoring consumers showed a remarkable sixfold increase in opening new credit lines than non-monitoring consumers. Personal loans were the most preferred credit product by these consumers, followed by consumer durable loans and loans against gold/jewelry.
Women's understanding of credit implications deepens
Data indicates that 44% of consumers are regularly engaging with their credit health, by monitoring their CIBIL score and report at least four times within a 12-month period. As women's understanding of credit implications deepens, India's credit market is witnessing a surge in informed borrowers. A remarkable 70% growth in self-monitoring female consumers indicates a significant shift toward prioritizing financial planning and proactive credit management.
