4 Different Credit-Scores You Should Know About

The first rating agency in India was established in the year 2000, which makes the history of credit health assessment in India less than two decades old. Since then three more credit rating agencies have been set up in India; thus now there are four different agencies then rate individuals based on their credit behavior and credit history. Although while the basic tenets of rating remain same, there might be few differences in their scoring model and also some other aspects. When you seek a loan, the prospective lender can seek the credit report from any of these four agencies. Thus it is important that one knows the basics that pertain to these different scores that one may have.

What’s in a Name?

The lender can seek the credit report from any of the four rating agencies to judge the credit health of the applicant and scores from all of these are valid. The rating by all agencies is done based on five factors that includes : the repayment history for paying credit card dues and EMIs, hard inquiries made by lenders, credit utilization, credit mix and the length of the credit history. The information supplied to all the agencies by banks and FIs are also same. However, there still might be a minor difference between the scores of all the four agencies due to the weightage that might be given to each parameter which may cause a variation of 5 to 10 points between scores of two different agencies but not more than that.

However, if you follow the basic tenets of being a responsible borrower then you will have a healthy score across agencies and if you want to increase credit score be sure to check what is included in the score calculation. When lenders seek a report from any of these agencies they are aware of the difference in the rating models of each of them and they will keep this in mind when evaluating the CIR of the customer.

As per the RBI guideline, all rating agencies have to provide a free report once a year to all customers who ask for it. The cost of getting the reports (mentioned below) is if you need another report after getting your free one in the same year.

  • TransUnion CIBIL Ltd:

It’s only fair that the first credit rating agency we talk about is TransUnion CIBIL. CIBIL was set up in the year 2000 and was given a license by RBI in the year 2009. TransUnion acquired an 82% stake in CIBIL in 2016 and hence it is now known as TransUnion CIBIL.  The score ranges from 300 to 900.  You can get a report and score by paying Rs. 550; you also could opt to take the option twice or four times in a year or just get the report for Rs. 159. Report is sent in 7 to 10 days; if online verification is successful then you can do a CIBIL score check through email too.

  • Experian Credit Information Co. of India Pvt. Ltd

This rating agency was set up in the year 2006 and was given a license by RBI in the year 2010. The rating agency had a different range of scoring but now they also score in the range of 300 to 900. The report can be sought by paying Rs 138 or the report and score both can be bought online by paying Rs. 399. If you send the request online you can receive the report immediately via email, an offline request may take up to 20 days.

  • Equifax Credit Information Services Private Limited

This agency received its license in 2010 and it also scores between 300 and 900. Basic report and credit score can be obtained by paying Rs. 138 and Rs. 400. Reports are sent within 7 to 10 days of the request being sent.

  • CRIF High Mark Credit Information Services Pvt. Ltd

High Mark was established in 2007 and received the license from RBI in 2010.  High Mark also had a different scoring pattern earlier but now just like the other three agencies above their scores also range from 300 to 900. You can get the report and the score by paying Rs. 399.

All the agencies have a defined and well laid out dispute resolution mechanism. So if you find out there is a difference of 50 points or more between score by two agencies be sure to find out the reason for this discrepancy.

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Why does the credit score differ between credit bureau?

What is a credit bureau? How does that work? Does that affect my day-to-day life? We are here to give you a proper insight on credit bureaus and their different styles of credit score ratings.

When you apply for a loan, the bank or the non-banking financial firm will try to pull up your credit report. The credit report will have all that is needed to understand you’re past financial history, your current debts. By having a thorough research on the same the bank then considers giving you a loan or any financial product like a credit card. But from where do the banks get the credit report?

There are four major credit bureaus in India; they are Equifax, CIBIL, Experian and Highmark. Majority of banks and Non-banking financial companies in India take assistance of CIBIL in terms of credit report of the customer.

CIBIL was established in the year 2000, Equifax, Experian and Highmark was granted a license in the year 2010 to enter Indian market and help with the credit rating system.

The scoring styles used by all these bureaus are different as they practice differently and do not want to collude with other bureaus.

 The Scoring System

CIBIL- the score ranges from 300 to 900, 300 being the lowest and 900 being the best. You can opt for a free cibil score from various Internet websites, but if you want a detailed report it will cost you INR 500.  It is not necessary to have a perfect 900 to get the loans sanctioned, every bank have their own protocols and you can avail a loan with a low CIBIL score as well but with a high interest rate. You can get the report within 7 working days once applied.

EQUIFAX- Equifax has a different approach when it comes to scores. Their score ranges from 1 to 999, on that 1 being the lowest and 999 being the highest, they more incline on the corporate side rather than individuals, the major services provided by them are Credit risk and fraud, industry diagnostics, etc. They take 10 days to generate the report. You can get it for INR 400.

EXPERIAN- Experian credit ranges just like CIBIL that is between 300 and 900, 900 being the highest and 300 the lowest. Experian on the other hand and more inclined to collection and money recovery, data analysis and customer acquisition. Usually they take 20 days, but with you a speedy process you can get it within 15 days. This will cost you INR 399 + Taxes.

HIGHMARK- the credit range in case of Highmark is a bit complicated, the score ranges from 300 to 850, but the scores are considered poor, if they are below 640 and are excellent when above 720. They specialize in verification, credit assist, data quality management etc.

The reserve bank of India has mandated all the financial institutions to access the credit scores to analyze if the individual is credit worthy.

You can increase your cibil score by fair practicing, pay your bills on time, do not hand on bad debts. With the perfect CIBIL score you can avail a lot of financial benefits, these credit bureaus also help you analyze how you could improve your credit scores. It only used to happen when credit report is used to determine loans, but now we are taking steps towards using it for every little transactions some sited like,

Screening for postpaid SIM card connections, Credit reports for online sellers, fixing insurance premiums, using the report to analyze prospective tenants, etc.

The credit score awareness is less among Indian people, hence they lack in credit discipline. Many people are unaware of the poor credit score and are denied loans. The bureaus play a vital role for banks for determining the credit worthiness of an individual.

How Can a Free Credit Report Help Indian Credit Users?

Are you planning to get a loan? If your answer is “yes”, then maybe you should take a look at your credit report first. You will be surprised to know how many loans get rejected on the account of a poor credit score.

There are countless Indian citizens who use credit cards, or have a loan under their name, but few realize the importance of their credit rating, which is affected by their credit behaviour. The following are the major credit bureaus of India that provide standard credit reports to the banks for consideration. If you have ever applied for a loan or a credit card, then be sure that your bank obtained your credit report from one of the following credit bureaus:

  1. Credit Information Bureau India Limited(CIBIL)

CIBIL is the most popular credit bureaus of India that the majority of lending institutions are associated with. It was the first credit bureau of India, and had recently partnered with TransUnion, which itself is one of the world’s most reputed credit rating and analytics companies.

CIBIL works along with TransUnion to provide credit reports of Indian citizens to private and government banks, along with other NBFCs. A CIBIL score ranges from 300-900, and is based on your credit usage, and repayment history.

  1. CRIF High Mark

CRIF High Mark is another highly recognized credit bureau of India that calculates credit score on the scale of 300-900, just like CIBIL. While the company is one of the top finance companies in the continental Europe, in India also the company has quite a reputation for its credit calculation and analytics standards.

You can obtain your CRIF High Mark score online for a modest fee.

  1. Equifax

Equifax is a US-based company that specializes in solutions for consumer, commercial, and workforce domains. In India the company works under the name ECIS, which stands for Equifax Credit Information Services Private Limited. It was renamed as the company collaborated with other financial institutions, namely Religare Finvest Limited, Sundaram Finance Limited, Union Bank of India, etc.  Just like other credit bureaus, you can get a copy of your credit report from ECIS online.

  1. Experian

Experian India is a fully owned subsidiary of Dublin, an Ireland-based Experian LLC, and operates as Experian Credit Information Company of India Private Limited. One of the reasons why Experian stands out from other credit information companies, is its proprietary statistical algorithm. This is why your credit score provided by Experian could be quite different than the one provided by other credit bureaus.

All the four major credit bureaus of India charge a certain fee for providing your credit report. However, there is a thing called “free credit report India” too. There are several websites that can calculate your approximate credit score by analyzing your payment history, credit usage, and some other factors that affect your score. While this leaves some room for error, you can certainly get a general idea of where you stand with your creditworthiness.

Here are a few ways a free credit report can be helpful to you:

  • Credit Health: A free credit report allows you to understand your credit health in a simple manner. The standard credit report can be quite complex for an average person to understand, but free credit report is simple and intuitive. Without going into unnecessary details it simply highlights what’s relevant to you.
  • Analytics: With a free credit report you can track your payment history, and your current stand with loan and credit card debt. Using it you can manage your payments accordingly. You can also check the score variation by month, and pinpoint the weak areas thus.
  • Credit monitoring: Of course, one of the best advantages of using free credit report is that you can use it to monitor your score easily. Before apply for a loan or a credit card you can check your report first, and if your score is low, then you can improve it first. With a high score your loan approval chance increases greatly.

If you are looking for an easy-to-understand yet premium free credit report tool, then simply fill out the form at freescoreindia. It offers an almost-accurate credit report which you can refer to if you don’t want to pay for the standard report, or just want something simpler.