Credit Bureaus In India
Learn about the differences between CIBIL and Equifax, two leading credit bureaus in India. Understand their unique features and how they impact your credit score
Whenever a lender is approached by someone looking to borrow money, the first question that clouds his mind is- Will I get my money back for sure? To tackle this doubt, lenders ask for a guarantee or collateral. But in case of the absence of collateral in unsecured loans, lenders rely on your credit history and credit score given by licensed credit bureaus in India. What are these, and how do they work? Let's find out.
What Is A Credit Bureau?
A credit score is a numerical representation of your creditworthiness, reflecting your past credit management. It helps lenders assess the risk and likelihood of timely loan repayment. Lenders generally prefer a credit score of 700 and above to provide loans.
The credit bureaus give out this credit score. Credit bureaus collect and maintain extensive credit-related information about individuals and businesses from various financial institutions, including credit card usage, loans, and overdrafts. These reports given by credit reporting agencies may also include additional information like income tax records and payment of utility bills. By analyzing this data, credit bureaus create comprehensive profiles that assess factors such as repayment behavior, default history, and debt-to-income ratio, aiding lenders in evaluating creditworthiness.
Are Credit Agencies and Credit Bureaus The Same?
Contrary to popular belief, credit bureaus and credit rating agencies serve different purposes. Credit rating agencies assess investment risk for investors, while credit bureaus collect individual information to generate credit reports used by lenders to evaluate creditworthiness. Credit rating agencies use letter ratings (e.g. AAA to CCC), while credit bureaus provide numerical credit scores (ranging from 300 to 850) in their reports.Credit Bureaus In India:
So, can any bureau claim to release such credit scores? Licensed bureaus provide such ratings. In India, RBI licenses companies under Credit Information Companies (Regulatory) Act 2005, to provide credit scores. As per this rule, there are 4 credit bureaus in India.CIBIL:
Previously known as Credit Information Bureau (India) Limited, TransUnion CIBIL is India's leading credit bureau. It collects and maintains credit information for over a billion individuals and commercial entities from three bureaus: Commercial Bureau, Consumer Bureau, and Micro Finance Institution Bureau. TransUnion generates Credit Information Reports (CIR) and CIBIL scores for individuals and CIBIL rank and CIBIL commercial reports for businesses. Members of CIBIL include major banks, housing finance companies, financial institutions, and NBFCs.CRIF Highmark:
Headquartered in Mumbai, CRIF Highmark is known as India's first full-service credit bureau. It offers comprehensive credit information to various lending departments, including MSMEs, commercial and micro-lenders, and retail customers. Apart from credit scores and reports, Highmark provides data management, insights, analytics, and software solutions to banks, NBFCs, MFIs, insurance companies, housing finance companies, and telecom service providers, among others.Experian:
Experian India, country’s first credit bureau to be licensed under the Credit Information Companies (Regulation) Act in 2010, offers credit reports and scores to individuals and businesses. Additionally, they provide marketing services and analytics tools, empowering users to make informed credit decisions.Equifax:
Equifax is now one of the world's top credit bureaus. Though it was established in 1899, it obtained a full license as a credit bureau in 2010. It provides services such as credit scores, risk scores, and portfolio scores to individuals. These scores range from 1 to 999, with 999 being the highest. Equifax also offers credit fraud reports, portfolio management, risk management reports, industry diagnosis, and other services for companies and businesses.Conclusion:
The bureaus do not directly influence credit decisions but rather generate their conclusion based on the data of each individual or company. The credit score these credit bureaus generate helps lenders assess risks appropriately before sanctioning loans. Based on your credit score, if you are also looking to seek financial aid through loans, look no further than the trusted name of IIFL Finance for a quick and easy loan process.Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.
