Equifax Credit Score Vs Cibil Credit Score



 

CIBIL is a credit bureau. It collects information from member banks/NBFCs regarding all the loans and their repayment status. They have a database which ecords every loan and the monthly repayment status every month. It also records new loan requests and their approval status. Based on this data they give provide each user a Credit score. They call this the CIBIL score. There are other bureaus (Experian, Equifax, CRIF) which provide their own credit scores.

Credit score is a function of how good you have been with paying your loans ontime. A default or a delay in payment will affect the score adversely and reduce your score. The lower the score, the less likely you will get a loan.

CIBIL makes money by selling this data back to the consumers, banks, businesses. Consumers can pay a fee and get their credit report from CIBIL. They are also entitled to a free report once every year.

Banks check the credit bureau data and the credit score for every loan application and decide whether they should approve it or not.

Businesses can check credit data to make customized offers or sometimes even as part of background checks before hiring.

Banks and Business should get the consent of the user before they can get their credit data from the bureau.

How Does Credit Bureaus Work In India?

As mentioned above, Credit Bureaus of Credit Information Companies collect, maintain and provide credit information (related to credit cards and loans) of an individual from banks and other member institutions and share the same with them that defines the credit worthiness of an individual. This helps the bank authorities to make a decision of whether to lend money and if yes, then at what terms and conditions. Here, one must note that CIC does not act as a watchdog. It caters the information related to salary, savings account, fixed deposits and other information are not shared by the members.

In India, there are four credit bureaus namely TransUnion CIBIL, Equifax, Experian and Highmark.

TransUnion CIBIL

India’s first credit bureau/credit information company, TransUnion CIBIL plays an important role by helping banks and other financial institutions to manage their business. It is organized into 3 divisions, namely consumer bureau, commercial bureau and MFI bureau.

Year Of Establishment – August 2000

Scoring System – 300-900 (900 is the best credit score)

Time taken to generate report – 7 days

Equifax

Equifax India is a joint venture between Equifax USA, State Bank of India, Kotak Mahindra Bank, Bank of Baroda, Religare Finvest Ltd., Sundaram Financial Services and Union Bank of India. It offers a range of credit services including information, business analysts and risk management.

Year Of Establishment – 2010

Scoring System – 1-999 (1 being the lowest)

Time taken to generate report – 10 days

Experian

Experian Credit Information Company of India or simply Experian is a joint venture of GUS Holdings, Axis Bank, Union Bank of India, Indian Bank, Federal Bank, Punjab National Bank, Sundaram Finance Ltd, Magna Fincorp Ltd and VIC Enterprises Private Ltd to provide credit information services to banks and individuals in India. It has also tied up with online financial marketplaces like Paisabazaar to offer free credit report and score to its customers.

Year Of Establishment – 2006 (got license in 2010)

Scoring System – 300-900 (900 is the best credit score)

Time taken to generate report – 20 days

Highmark

CRIF Highmark is the only credit bureau in India that caters the need of segments like MSME, commercial borrowers, retailer, micro-finance borrowers. It provides analytics, data management and related credit services in order to sustain the financial needs of business and customers.

Year Of Establishment – 2007 (got license in 2010)

Scoring System – Not Available

Time taken to generate report – 5 minutes

Difference Between Equifax Score And Cibil Score

Now there are two credit bureaus in India, CIBIL and Equifax – So the obvious question is, “Which one is better?” and Does it make sense to have credit score from both the companies? You will be surprised to know that in India many banks are already looking at more than one credit report and are expected to look at multiple sources of information before lending to anyone. So, having a credit report and credit score from two credit bureaus will help a lot. So, if you have good credit score with both CIBIL and Equifax, it really works in your favour as it’s a double confirmation for the banks that you are a good customer.

Whereas if you have a bad score – “god save you” … It would be extremely tough to get a loan in that case. Also, in case there is any discrepancies in the scores then banks can give more weightage to one score and less to other or just choose one score which it feels right. So in case you want to check your Equifax credit report go ahead and apply for it.

CIBIL (Credit Information Bureau India Ltd.): This is the most popular credit scoring agency, and was established in 2000. It offers its customers numerous services apart from credit scores like credit information reports, market insights, and more. For financial institutions, it offers services like portfolio review analysis, company bureau analyser, etc. It takes up to 7 days to generate a credit report, and rates individuals between 300 to 900 with 300 being the lowest score and 900 the highest.

Equifax: This credit scoring agency was established in 2010. It scores borrowers on a scale between 1 to 999, with 1 being the lowest score and 999 the highest. The organisation offers its consumers numerous other services like credit information reports, etc.

Is a credit score and a CIBIL score the same thing?

Credit score is a mark assigned by credit bureaus. CIBIL is one of the credit bureau. There are others like Experian, Equifax, CRIF Highmarks. Everyone will have their own unique methodology for assigning credit scores. As per my knowledge CIBIL, Experian and Equifax pose more or less a same score. But this one thing called CRIF Highmarks, i was surprised to see my score was grossly lower by 250 compared to others. Luckily lenders assign cut-off marks to round off such variations.

So, CIBIL is just a company. Assigning credit scores is one of the jobs they do. Its just people got used to calling a credit score as CIBIL score.

Is CIBIL the only one that provides a CIBIL score?

What you need to understand is that CIBIL is a credit bureau and provides with a credit score (this is popularly known as CIBIL score in India since CIBIL was the first bureau to be established).

There are three more bureaus in India namely, Equifax, Experian and Crif Highmark. All these are approved by the RBI and provide with credit report and credit score.

Are credit scores and CIBIL scores the same in India?

The general term is Credit Score. TransUnion CIBIL is one amongst 4 RBI approved providers. It is now being used like Xerox (company name) for photocopy (a generic word).

4 companies are CIBIL TU, CRIF High Mark, Equifax and Experian.

The score range has been standardized to 300–900 by RBI. 900 is highest possible score whereas 300 is the lowest score. A customer not having any footprint or having footprint in last 2–3 months is not considered for score. Such customer get indicative scores of 0, -1 etc.

How does one know his/her credit score in India?

The Credit Score/CIBIL Report is inquiry regarding your financial eligibility mostly required while in case you are apply for loans banks and other credit lending agencies check your credit score while judging your your credit profile in order to approve you loans. It has an entire record of your borrowings, repayments that you made and more.

A Credit score or cibil score assessment is done by 3 credit agencies of RBI. The 3 credit agencies are CIBIL, Equifax credit score and credit rating agency and Experian. In India, among the agencies, CIBIL is all the more ordinarily known since they have been around in India for a more drawn out time frame. Loan specialists, for example, banks and NBFC's utilize` these credit rating (be it CIBIL score, Equifax Score or Experian score) to evaluate your credit potential. Moneylenders utilize this CIBIL score to figure out who is qualified to profit advances and credit limits.

Your CIBIL score is a 3 digit number and the CIBIL score ranges from 300-900. 900 is viewed as the best score. On the off chance that you don't have a record, your CIBIL score will be - 1. In the event that you have a record as a consumer of only 6 months, your CIBIL score will be 0. It as a rule takes 18-36 months to fabricate your record of loan repayment.

FAQs on Credit Score

Are credit scores and CIBIL scores the same in India?

The general term is Credit Score. TransUnion CIBIL is one amongst 4 RBI approved providers. It is now being used like Xerox (company name) for photocopy (a generic word).

4 companies are CIBIL TU, CRIF High Mark, Equifax and Experian.

The score range has been standardized to 300–900 by RBI. 900 is highest possible score whereas 300 is the lowest score. A customer not having any footprint or having footprint in last 2–3 months is not considered for score. Such customer get indicative scores of 0, -1 etc.

How does one know his/her credit score in India?

The Credit Score/CIBIL Report is inquiry regarding your financial eligibility mostly required while in case you are apply for loans banks and other credit lending agencies check your credit score while judging your your credit profile in order to approve you loans. It has an entire record of your borrowings, repayments that you made and more.

A Credit score or cibil score assessment is done by 3 credit agencies of RBI. The 3 credit agencies are CIBIL, Equifax credit score and credit rating agency and Experian. In India, among the agencies, CIBIL is all the more ordinarily known since they have been around in India for a more drawn out time frame. Loan specialists, for example, banks and NBFC's utilize` these credit rating (be it CIBIL score, Equifax Score or Experian score) to evaluate your credit potential. Moneylenders utilize this CIBIL score to figure out who is qualified to profit advances and credit limits.

Your CIBIL score is a 3 digit number and the CIBIL score ranges from 300-900. 900 is viewed as the best score. On the off chance that you don't have a record, your CIBIL score will be - 1. In the event that you have a record as a consumer of only 6 months, your CIBIL score will be 0. It as a rule takes 18-36 months to fabricate your record of loan repayment.

Is a credit score and a CIBIL score the same thing?

Credit score is a mark assigned by credit bureaus. CIBIL is one of the credit bureau. There are others like Experian, Equifax, CRIF Highmarks. Everyone will have their own unique methodology for assigning credit scores. As per my knowledge CIBIL, Experian and Equifax pose more or less a same score. But this one thing called CRIF Highmarks, i was surprised to see my score was grossly lower by 250 compared to others. Luckily lenders assign cut-off marks to round off such variations.

So, CIBIL is just a company. Assigning credit scores is one of the jobs they do. Its just people got used to calling a credit score as CIBIL score.

Can taking a loan from a bank increase my CIBIL score?

If you don’t take an exam, how will you know how much you can score? It is the same with credit score. Unless you take out loans, credit bureaus cannot gauge your score.

Taking a loan and repaying it on time without defaulting can increase your CIBIL Score. When you take/use credit - be it secured loan (home loan, gold loan etc.), unsecured loan (personal loans) or credit credit, your credit behaviour is closely monitored by your lender or credit card company and the details are sent to credit bureaus in India (TransUnion CIBIL, Experian, High Mark & Equifax).

The credit bureaus assess your records accordingly assign you a score between 300 and 900. If your score is above 750, it is considered good and no lender will hesitate to give loans to you on the basis of this score (unless there are other reasons). So you can prove your creditworthiness only by using the credit and being responsible with that credit.

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