Credit information companies are financial institutions regulated by the Reserve Bank of India. They are responsible for collecting and retaining data related to the credit behaviour of individuals and businesses in India (CICs). Financial organisations such as banks and non-banking financing companies will check your credit reports before approving your application when you apply for a loan or credit card.
Credit information firms that are often based on credit bureaus are in charge of compiling a credit report. It is possible to get information about a person's credit history and capacity to repay debts via top credit bureaus in India that collect information from their membership (individual consumers and private lenders). There are presently four active credit bureaus in India, and all domestic credit bureaus must get licences from the Reserve Bank of India (RBI).
Following this information collection, these organisations use it to construct individual borrowers' credit reports and credit scores based on information obtained from various lenders and loan types. In India, there are presently four credit reporting organisations, which are as follows:
CIBIL, Experian, Equifax and Highmark.
Did you know?
Various credit bureaus create different credit scores for the same person.
How Many Credit Bureaus in India Are There?
The Reserve Bank of India has granted permission to four credit information businesses to do business in India. These are as follows:
- Equi-fax
- CIBIL
- Experian
- HighMark
Four Indian Credit Reporting Agencies Are Compared Below.
|
Variable |
CIBIL (TransUnion) |
Equifax |
Experian |
Highmark (CRIF) |
|
Impact in India |
Granted a licence in 2010. |
Founded in 2000. |
In 2010, granted a licence. |
In 2010, granted a licence. |
|
A Possible Range Of Credit Scores |
Within 300-900 - A score of 900, over 750, is considered excellent, while a number below 300 is deemed to be wrong. |
Within 300-900 – CIBIL scores over 750 are considered excellent, while those around the lower end of this range are considered subpar. |
The initial spectrum of up to 999 has been reduced to a comparable range of 300-900. |
A matching 300-900 content has been moved from the initial scope. |
|
Payments |
₹138 for the Basic Report and ₹400 for the credit score. Only DD will be able to pay for this. |
₹550 for a one-time report and credit score. Subscriptions for twice, even four times per year, are available. Internet banking, direct debit or prepaid cash card. Alternatively, you may pay ₹159 for a credit score, which you can only pay for using a DD. |
Credit Report costs ₹138. Direct Deposit (DD), National Electronic Funds Transfer (NEFT) or an NEFT-enabled bank. A credit score and report cost is ₹399 when purchased online. |
Cost of Credit Report along with score ₹ 399. |
|
The Length Of Time Taken |
Following the validation of the authenticating papers, a credit report is generated, and it might take anything from 7 to 10 days. |
The credit report will be provided when the papers have been verified, which may take up to seven days. Once your online verification is adequate, you will get an email with the necessary information. |
After being verified, online applicants will get a copy of their submission via email in real-time. Offline requests may take 20 days to be processed and verified. |
|
|
Assertion Of Rights |
Absolutely. The Dispute Resolution Form may be downloaded and sent to the address provided on the website with the necessary verification proof. |
Yes. An online complaint is also possible. |
Query Application Forms are downloadable and completed on the internet, and they are sent to the actual address with the form and the required verification papers. |
You may use the contact form to ask questions regarding your CIR on the web page. |
Parallels Between Credit Reporting Agencies and Other Businesses
According to the Reserve Bank of India, all four credit bureaus in India have been granted licences by the Central Bank of India. There are some parallels between credit reporting agencies and other businesses.
All of the three major credit bureaus in India receive information about your credit history from various lenders, including banks and non-banking financing companies (NBFC). They make no distinction between the numerous credit reporting agencies and give them access to all of your credit information. Furthermore, each of the three major credit bureaus uses a different methodology to determine your types of credit scores than the other two, making it difficult to compare them.
As a result, credit reports obtained from any three major credit reporting companies are valid and accurate. The five factors used to establish a credit rating are the same regardless of which agency is used to create the score. However, different credit reporting agencies use different algorithms to do so.
An individual's credit score is calculated by taking into account reimbursement history, type of credit, length of credit history, amount of credit exposure and the number of credit inquiries. Credit bureaus in India use these factors to calculate a credit score for each individual.
The importance of understanding that credit scores from two different credit reporting companies may differ but that both are valid cannot be overstated. The fact that two credit rating agencies have ratings that are slightly different from one another is not all that common. In many cases, there is a 50-60 point difference between the credit scores of banks and non-bank financial institutions (NBFCs).
Also Read: Know All About your CIBIL Score and Report
Consumer Financial Database With Several Advantages
1. Reduced Lender's Risk
Each customer's inquiries and trade lines are accessible to lenders for an extended time, allowing them to assess the creditworthiness of each individual.
They will then have the opportunity to adjust the level of risk they are willing to accept. Profitability and revenue will be adversely affected by a company's adoption of an intelligent risk management strategy supported by extensive data collection.
2. Judgement Call Gets Quicker
The result is that decisions are made in a shorter amount of time. Any lender can decide about their loan if they access the information provided above.
A consumer's credit score provides information to a lender about the likelihood of a consumer repaying a loan or credit card debt. The Credit Information Report provides the lender with both short and long-term perspectives. With this, the lender can conduct a more thorough analysis of the borrower and make an educated decision more quickly.
Also Read: What is CIBIL Rank & Company Credit Report?
3. Asset Monitoring Made Simpler
When lenders have access to a database shared by all of the participating institutions, it is much easier for them to keep track of the credit performance of their borrowers consistently.
4. Identification
Because of the large amount of data in the client list, it is much easier to identify a particular client. To validate Permanent Account Number (PANs) and Aadhaar cards, Equifax's database is linked to Indian databases such as the National Statistics Development Laboratory (NSDL). A more efficient authentication process is achieved as a result of this improvement.
Conclusion
Aside from the general public, specialised borrowers benefit from the credit facility. They are made aware of their credit situation and what they must do to become loan eligible. Individuals who have a clear grasp of their financial situation are better positioned to take charge of their types of credit scores and make sound financial choices.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.
