Making you eligible for loans and credit, is startup Rectify Credit
A large population of our country is still ignorant about many things in the financial space. Getting a loan or a credit card may seem easy money, but proper education and due diligence at the customers' end is still missing. Even among those who have loans and credit cards, not many know that the way they behave with their present credit can impact their future borrowing capability. For that matter, the credit limits set on your mobile phone bills may be decided on the basis of the credit you have borrowed. This whole exercise is called is ‘credit history’ – where the behavior of the borrower is tracked, once he becomes a six-months-old borrower.There are agencies - such as, Credit Information Bureau (India) Ltd (CIBIL), Experian, Equifax – which keep the credit scores of individuals; and reports generated by these agencies are, in turn, used by banks to decide whether an individual is worthy of lending.
Now you can seek help from Rectify Credit if you fall on the wrong side of finance. Rectify Credit is a Mumbai-based startup that helps you – in simple terms – get that loan or credit if you are facing trouble getting it directly. Founded by Aparna Ramachandra, Rectify Credit is today a 30-member team spread across Mumbai, Bangalore, Delhi, Hyderabad, Ahmedabad, Bhubaneshwar, Jamshedpur and Pune. While Mumbai is the company headquarters, the other centres serve as branch offices to interact with customers and local banks.
Talking about the idea, Aparna says: “I was doing something similar with Barclays in the UK and I always wanted to come back and start here. That was also the time CIBIL had launched in India.” In the year 2007, RBI had made it mandatory for all the big banks to submit their customer data to CIBIL to build a central repository of borrowers. Rectify Credit launched in June 2010. And Aparna says they got a call from their first client a day after they launched their website, but they were not sure how to price their services and so on. Three years on, Rectify Credit is growing at an impressive 32% annually and Aparna says there is still a lot more to do.
What the venture does is to understand the process of credit repair and use a professional and correct approach to resolve the credit problems. This involves understanding the customer's existing lines of credit and credit habits. “Many times just a few specific steps can help you improve your credit report. We create a credit repair strategy individually for customers which normally varies for different individuals,” explains Aparna. In short, Rectify Credit helps fix the long term credit outlook for an individual, so that he doesn’t face any trouble in the future.
Today, the RBI has made it mandatory for all the banks to submit their borrower information to the credit bureaus in the country, and based on this information, an applicant is made eligible for any loan or credit. “CIBIL itself has close to 30 million individuals database, and in that close to 70% is bad and YOY about half a million more customers are getting added to it,” says Aparna, about the market opportunity. Rectify Credit is an official partner of CIBIL and also has tie-ups with HDFC, Citibank, Standard Chartered, Kotak, and Axis. “Many a time the customer gets a bad credit history, only because he has defaulted on a few installments. This can be because of some financial problem, loss of job or something and we can help these customers get back on track,” explains Aparna.Today, on an average, Rectify Credit deals with over 120 customers per month and the average ticket size of a resolution is Rs 5,000. The startup has recently tied up with a background verification company, which checks candidate's backgrounds before they can join a company. “Just like a candidate is verified on the academic, employment and police front, we help this company verify a prospective candidate’s credit history. That is also an important aspect to understand about an individual,” explains Aparna. Rectify Credit on an average handles about 400-500 such checks in a month.
While the venture continues to grow at a healthy pace, Aparna says customer acquisition is still a concern for them and they are taking steps to improve that. “We earlier invested in digital marketing, but realized that the nature of the business is such that customers need to come and see the office and be assured that we are not fly-by-night operators. Therefore, we are getting into more markets,” she says. Another concern is the reluctance of the banks side to work with them. “In India it is very sad that banks think we are competing with them. In fact, we are complementing them. So if we could work with the bank, then they can give us those defaulting customers or bad customers and we can work with the banks to grow their business. What is happening today is that the person sitting at the bank counter has pressure of targets to be met, and he doesn’t have 20-25 minutes to spend with every customer. So, he just says your loan is rejected. As a customer you wouldn’t know why your loan is getting rejected. We are telling the bank, if you are rejecting them give them to us. We will counsel them, we will figure out why they are getting rejected and then work around, so that next month they are ready for you to sell your product. Today there is so much competition, so customer acquisition is an expense for banks, but the bigger expense is customer retention,” reasons Aparna
While it has been a struggle to convince banks, once they have managed to show banks the value they bring to table, banks come back to them, says Aparna. As consumption and aspiration of Indians increase, credit and loans are becoming an integral part of our lives. Therefore the opportunity it presents to startups like Rectify Credit is also very promising.
