Mrs. Bakshi works for the IT sector at a senior position and draws a monthly income of INR 1,30,000. She is servicing three credit cards, one education loan for her daughter and a car loan. All of these have been procured from different banks. She now wants to know her performance on all of these loans and also wants to find out, how much is the outstanding on her loans and credit cards, to manage her finances properly.
What would she do to procure information on her loan accounts from all these banks? Run around to all the banks and ask for information?
Well, there is a single window / platform from where, this information about multiple loan accounts can be procured. It is known as ‘credit information bureau’. In India, the most well-known bureau is Credit Information Bureau (India) Ltd. Abbreviated as CIBIL. Let’s know more about these ‘credit bureaus’.
Credit Information Bureaus are the repository of credit and loan related information of borrowers. This is the information submitted by banks and lending institutions to the bureaus – about those customers who have – either single or multiple – loan accounts.
A customer who has multiple loan accounts at different banks, and wishes to draw information on all of those, may find it challenging & time consuming to do so. Whereas, if there is just one institute that provides all the information on all loan accounts of a particular customer, it is very convenient and also quick to seek such information.
This loan account information is known as “credit information report” and is prepared by credit bureaus based on the details submitted by the banks / NBFCs. A credit report can be of either individual customers, business enterprises or organizations & institutes. On the basis of information submitted by the banks, the credit bureaus compute credit score that marks the credit worthiness of the account holder.
How can one single bureau have all the information of Mrs. Bakshi’s loans and credit cards?
All the banks who lend money in the form of either loans or credit cards, have to compulsorily submit such information to the credit bureaus on a regular basis. Hence, any bureau will have all the information on a particular customer’s credit history whether it is a loan or a credit card; or whether they have taken loan from a single bank or more than one bank.
Is there only CIBIL or are there more credit bureaus in India?
There are four Bureaus operational in India, to whom all the banks report their loan information. Credit Information Bureau (India) Ltd. or CIBIL , Equifax Credit Information Services, Experian Credit Information Company and Crif High Mark Credit Information Services. A customer can seek their credit report from any of these bureaus. These credit bureaus charge a nominal fee to provide customers their credit information report and credit scores.
CIBIL charges INR 500.
Equifax charges INR 400.
Experian charges INR 400.
Highmark charges INR 300.
Many people wrongly believe that a bureau will provide them their credit information for free. There is no such a thing as free credit report or free credit score. One has to pay for such service.