Mumbai – April 11, 2017 – Approximately 92% of Indian credit card holders often pay a greater amount than the minimum due on their monthly credit card bills. Further, it is estimated that nine out of ten credit card users are aware that delay or non-payment on credit card bills negatively impacts their CIBIL Score and Report. These are some of the key findings of the latest research by TransUnion CIBIL, which included a survey across 8 metro cities in India. This research is part of TransUnion CIBIL’s continuous endeavour to de-mystify consumer credit behaviour and highlight the importance of trended data for credit decisions.
Speaking about the findings of the research, the Chief Operating Officer of TransUnion CIBIL, Ms. Harshala Chandorkar said, “The India survey findings are in line with TransUnion CIBIL’s research insights. In fact, analysis conducted on long-term payment behaviour suggests that consumers who pay more than their minimum payment due on credit cards are less likely to go delinquent. Behaviour on credit card payments has an impact on the overall credit performance of the individual and can provide deep insights for credit decisioning. Such findings derived from trended data could help improve risk assessment for lenders while providing higher opportunities to consumers with lower risk profile across retail lending portfolios.”
TransUnion Global Research Findings
The observation that consumers who frequently pay more than their minimum due are low risk, appears to be a universal credit behaviour. TransUnion has conducted similar research across global markets and came to the same conclusion. Specifically, the global research also determined that the more consumers pay over their minimum payment due for credit cards or other revolving lines of credit, the less likely they are to go delinquent. Such findings derived from trended data could help lenders better mitigate account risks and maximize consumer opportunities across their portfolios.
Explaining the concept of trended data Ms. Chandorkar said, “Whereas a traditional credit report offers a glimpse of a consumer at a point-in-time, trended data analysis leverages up to 36 months of historical information. How each of the data points interacts with others over this period gives further insights into credit behaviour which was previously not possible to this scale and scope. For example, while a traditional CIBIL Report may tell you a consumer has INR 30,000 in credit card debt, one using trended data would show you whether they have built up or paid down that balance over time”.
Important to note that according to a TransUnion CIBIL survey of 1,100 consumers in India, 92% of respondents indicated that they more often make payments in excess than their minimum due on their credit card bills each month. Yet a significant number (33%) are uncertain about the importance or benefits of paying more than the minimum amount due on their credit card bills.
“Our findings, combined with the increased use of trended data, is good news for Indian consumers, particularly those who make payments in excess of the minimum amount due on their credit card bills each month,” Ms. Chandorkar said. “Even if consumers can’t pay the full balance, they may now find that banks and credit institutions view them in a more positive light depending on the amount they do pay. We encourage the use of trended data and the reporting of payment behaviour to ensure both lenders and consumers can benefit from these trended data insights.”
The TransUnion global research also did a comparative study on how consumers pay on their credit card in different countries. Interestingly, India ranks highest in the percentage of credit card holders that often make payments in excess of their minimum due on their revolving debts each month as compared to other countries included in the study.
Around the World: How Do Consumers Pay Off Their Credit Cards?
“Leveraging trended data and the insights derived from it could also significantly help Indian credit institutions better identify borrower risk trends across portfolios and ultimately create greater access to credit for consumers. This can only happen when financial institutions utilize trended data in real time,” said Ms. Chandorkar. “When lenders can access it broadly across the consumer wallet, it allows them to better tailor their products to consumers, which builds better loan relationships and helps everyone in the long run.”
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