Credit bureaus are responsible for regulating the flow of credit within the economy. The Credit Information Bureau of India Limited or CIBIL collects information about credit holders to determine their creditworthiness. In addition, they maintain a credit history of every individual to help banks assess risk and provide products and services accordingly.
Whenever you apply for any credit, be it a loan or a credit card, the first thing that the lending institution does is get your credit history from credit bureaus. These credit rating agencies have a record of the credit behaviour of individuals and companies, which helps banks assess if the b orrower is low risk or a high risk one.
Here is everything that you need to know about various credit bureaus in India, how the credit bureau score is calculated and why this is such an important parameter to determine your creditworthiness.
Additional Reading: What is Credit Monitoring?
In India, credit bureaus collect credit information about individual borrowers and companies to compile a detailed credit report. This information is provided to them by lending institutions periodically. In addition, it includes the details about existing credit, outstanding dues, repayment history and other vital information necessary for CIBIL score calculation.
Among India's three major credit bureaus, TransUnion CIBIL, also known as the Credit Information Bureau of India Limited, is the most popular one. Most banks in India rely on the CIBIL score to accept or reject an individual's application.
A credit bureau sells this credit information to financial institutions and other lenders or creditors as needed. These are private companies but are regulated by the Reserve Bank of India. Individuals who want to understand how to improve CIBIL score can even carry out regular checks on their CIBIL scores and assess the causes for a decline in the score. Whether resolving a CIBIL dispute or changing the credit behaviour, you can make necessary changes to improve your credit history.
Additional Reading: What is commercial cibil score?
The top three credit bureaus in India play a significant role in determining the health of an economy. Here are the responsibilities of credit bureaus to help you understand their purpose in an economy:
Additional Reading: What is minimum cibil score?
The formation of credit bureaus in India is traced back to the need to build a more sophisticated system to track credit. The primary objective of forming CIBIL and the other three major credit bureaus in India was to have an information repository that creditors and lenders could use of to make better lending decisions.
In India, the Credit Information Bureau of India Limited was established in 2000 by the Reserve Bank of India, which makes us relatively new to tracking credit history. Today, it is promoted by TransUnion International Inc, which provides comprehensive credit aggregation facilities. It collects information about both individual and commercial borrowers and provides it to a closed group of lending institutions.
In 2010, the three other credit check bureaus, namely Equifax, CRIF High mark and Experian, were approved by the Reserve Bank of India 2010. In 2011, the first-ever microfinance bureau was launched by High mark. This is one of the largest microfinance credit bureaus in the world, which offers services primarily to the retail lending industry. In India, CRIF High Mark also became the first-ever credit bureau catering to various borrower segments, including agri, retail, MSME, microfinance and commercial.
These credit bureaus offer services like CIBIL score check online by pan card free to their account holders. They also disseminate a lot of data to the lending organizations to ensure the prevention of fraud and bad loans. However, most of this data is very sensitive, which makes it necessary for these credit information companies to be regulated. They are all registered and licensed by the Reserve Bank of India. This ensures that there is no malpractice while the data is shared. The type of data shared and the format of data sharing is standardized according to the Credit Information Companies Act 2005 to protect the privacy of consumers.
Additional Reading: What is cibil grievance?
The role of the CIBIL bureau and other credit check agencies includes the following:
Additional Reading: How to check cibil defaulters list?
Besides the CIBIL, there are three major lending bureaus in India currently. Here is everything that you need to know about them:
Incorporated in 2000, this is the most popular and most used credit bureau in India. The CIBIL Bureau was formed according to the recommendations of the RBI Siddiqui Committee. It currently holds the largest consumer database collection with more than 5000 members. This includes banks, housing finance companies, NBFCs and other lending organizations. CIBIL maintains records of more than 1000 million businesses and individuals.
The CIBIL score, which is one of the most reliable parameters to assess the creditworthiness of an individual, was introduced in 2007. It is a risk-scoring method that is used by most banks and NBFCs. In 2017, the Credit Information Bureau of India Limited became TransUnion CIBIL after their stakes were acquired by TransUnion International Ltd.
One of the best known global credit rating agencies, Equifax, was registered in India in 2010. It was formed as a joint venture between Atlanta-based Equifax Inc and seven other financial institutions. Their USP lies in providing reliable credit data to companies to make the right investment decisions. They provide innovative analytical services and are known for their insights, flexibility and better time to market. They are currently based in Mumbai and are known for their access to unique data, which is very valuable to large corporations and businesses while making financial decisions.
This is another international credit bureau agency which is headquartered in Dublin. It is promoted as the premier information services provider, which operates more than 11 commercial credit bureaus and 17 consumer credit bureaus. The primary goal is to provide insights for better consumer risk assessment.
In addition to credit information, Equifax also provides access to trade data, banking sector data, legal items and others that help institutions make better lending decisions. They are known for their unique techniques that collate data to arrive at customized credit scores, which can be used to improve the current processes. This also helps automate the decision-making process and reduce collection costs.
Next to CIBIL, CRIF Highmark is the most used credit information provider in India. They have the most extensive database that can be used by NBFCs, banks, insurance companies and other lending organizations.
CRIF pioneered microfinance bureau databases in India. They have grown into the largest microfinance bureau in the world today. They have the advantage of sophisticated search algorithms, which helps them collect data efficiently. Today, CRIF is known for their dedupe technology and the best records of the credit behaviour of both individual consumers and large corporations. They also provide the best credit management technology and scoring solutions to help lenders add more value to their customers.
Follow the link for: Cibil Login Registration
Know how good your score is
Get insights on how to improve it
Unlock offers as per your score
In India, most banks and NBFCs rely on the CIBIL score. This is calculated by TransUnion CIBIL, which was the first credit bureau to be established in India in 2000. CIBIL enjoys a large member database of more than 5000 banking and finance institutions in the country.
There are six registered credit bureaus in India currently. This includes CRIF High Mark, TransUnion CIBIL, Equifax, Experian, CRISIL and ICRA. Of the six credit bureaus, the first four are best known and most widely used.
The credit score provided by all the major credit bureaus in India can be considered accurate as they use sophisticated software and calculation methods. We currently have a credit score range of 300-900. However, most banking and lending institutions refer to the CIBIL score to make financing decisions.
Innovis is a credit bureau that offers the same services as Equifax and TransUnion. However, it is not as well known in India. Creditors primarily use the data provided by Innovis to create a list of customers for their pre-screening and marketing processes.
SageStream LLC is a consumer reporting agency. This means that they prepare consumer reports and even create credit scores for clients who are primarily credit grinding companies and other lenders.
Innovis is not the same as Equifax, although their functions are similar. They are both credit rating bureaus that use consumer data to develop the credit score and credit history to assist landers with risk assessment.
Equifax is considered the largest credit reporting agency globally. However, in India, the CIBIL score prepared by the TransUnion CIBIL is most common.