Top Credit Bureaus in India You Should Know

When you apply for a loan, the lender either rejects or accepts your application based on your credit score and report. This credit report is prepared by one of the authorised credit bureaus in India. Any negative remarks, such as previous loan default, skipped EMIs, etc. on the credit report will make it difficult for you to secure funds. Credit bureaus also assign you an overall credit score indicating your creditworthiness.
 
But have you ever wondered which bureau gave your credit score or how many credit bureaus exist in India? This article will inform you everything about these credit bureaus and thus, improve your financial awareness.
 

What is a credit bureau?

A credit bureau is an agency that collects the financial and personal information of individuals and companies in a particular region, such as India. This bureau analyses and organises the data into documented information in the form of a credit report. The report is then shared with different kinds of financial institutions, employers, and insurance companies when required. 
 
Credit bureaus' primary function is to assist lenders and insurers in determining your creditworthiness. They assign you a credit score that assists lenders in determining whether you can pay your debt and policy premiums.
 

What types of information do credit bureaus collect?

 
Credit bureaus collect four major types of data, including the following:
 

1. Personal information

   Credit bureaus have data of millions of people. As such, they collect detailed personal information to distinguish between people with the same name. Some of these pieces of information are as follows:
    
   • Current and previous address
   • Date of birth
   • Employment history
    

2. Public records

   Various financial matters are settled, and information is provided to the public department or courts. Among these are bankruptcy cases, liens on property, civil judgments on loan settlements, etc. This information provides a clear picture of your financial situation. Thus, credit bureaus keep such details in their databases.
    

3. Inquiries

   Soft and hard inquiries are the two types of credit inquiries. A soft inquiry is when a financial institution requests your credit report to see if you are a good fit for their pre-approved loan offers. Such inquiries are rarely recorded on a credit report. On the other hand, a hard inquiry is when you apply for a loan and the lender requests your financial information from the credit bureaus. Multiple hard inquiries for your profile in a short period may indicate that you are a desperate borrower. This will result in the credit agencies lowering your credit score. These hard inquiries remain recorded on your credit report for two years.
    

4. Tradelines

   Tradelines refer to different types of credit you have availed over time. It is possibly the most crucial piece of information that credit bureaus collect. Any negative aspects of tradelines will result in an immediate loan rejection. The information gathered here is regarding the following details:
    
   • Name of creditor
   • Loan Type
   • Unpaid balance
   • Your previous EMI
   • The date you obtained a loan
   • Loan account closure date
    

Also Read: All you need to know about your credit score
 

Top Credit Bureaus in India

 
There are a total of four credit score companies in India that are responsible for deciding if you qualify for a loan or not. These are described below. 
 

1. TransUnion CIBIL

   If your query is "which credit bureau is the most important in India?". The answer is TransUnion Credit Information Bureau (India) Limited, popularly known as CIBIL. This credit agency was launched way back in the year 2000. However, it received a licence to begin operations in 2010. The CIBIL database, to date, contains credit information of around 32 million companies and 600 million individuals.
    
   The two sections assisting CIBIL in determining your credit score are Enquiries and Accounts. According to CIBIL, your credit portfolio, debt repayment history, number of hard inquiries, and credit utilisation rate are crucial factors affecting your credit score. 
    
   The CIBIL score ranges from 300 to 850. If your CIBIL score is over 720, obtaining a personal loan or other unsecured loans on favourable terms is not difficult.
    

2. Equifax

   Equifax was founded a century ago in 1899 and is one of the world's oldest and largest credit rating companies. The company received a license to operate as a full-fledged credit bureau in 2010. The credit score on Equifax's rating scale ranges from 1 to 999. Equifax calculates a credit, portfolio, and risk score for individuals. Whereas for companies, it provides a report on credit fraud, industry diagnosis, risk management, and portfolio management. 
    
   While calculating your credit score, Equifax uses credit utilisation rate, number of credit lines, type of credit account, repayment history, and the length of credit. It also assigns a weight to these factors.
    

3. Experian

   Experian, another well-known credit score agency in India, was founded in 2006. However, like the previous two agencies, it received a licence to begin credit rating operations in India only in 2010. This credit bureau is the only one in India to be licenced under the CICRA, or Credit Information Companies Regulation Act, 2005.
    
   The credit report generated by Experian includes the nature of the loan, repayment history, default (if any), hard inquiries, and a few more. 
    
   Experian's credit score ranges from 300 to 900.
    

4. CRIF High Mark

   CRIF High Mark is the only agency in India which has received approval from the Reserve Bank of India (RBI) to carry out its functions. Established in 2007 and licensed in 2010, CRIF covers individuals, SMEs, micro-enterprises, and other entities.
    
   It calculates the credit score based on credit mix, debt-to-income ratio, repayment history, loan length, and a few other factors. The credit score of CRIF ranges from 300 to 900.
    

Also Read: 5 Brilliant Ways to Avail a Personal Loan with a Low Credit Score
 

To conclude

 
Credit bureaus play an important role in loan approval. Regardless of your income, if the credit agency's report is negative, you will have a difficult time obtaining funds. It is recommended that you check your credit score at least once a year by visiting the official website of any credit bureau. However, among the many credit bureaus in India, most financial institutions prefer reports from the CIBIL.