All you Need to Know about Credit Bureaus in India

A credit bureau or a credit information company (CICs) is an organisation that collects and maintains information on the financial activities of individuals and businesses.

They gather information from a variety of sources, including banks, credit card companies, and other financial institutions. Read on to learn more about the leading credit bureaus in India.

How do the credit bureaus in India work?

Credit bureaus work with various lending institutions and providers. They provide information to assist lenders in making decisions about whether to approve loan applications or not. Typically, the clients of credit bureau agencies include banks, credit card issuers, mortgage lenders, and other organisations that deal with personal finance and lending.

A credit score is a three-digit score ranging between 300 and 900 that represents your creditworthiness based on your credit history. Lenders use these scores to determine whether or not to approve a loan application, and at what interest rate. A higher credit score generally means better-borrowing terms, while a lower score may lead to higher interest rates or outright loan denial.

Check your CIBIL Score

What are some of the popular credit bureaus in India?

Here are the top four credit bureaus or CICs in the country, based on their market share and popularity:

1. TransUnion Credit Information Bureau (India) Limited or TransUnion CIBIL

TransUnion CIBIL is the oldest and the most popular credit bureau in India. It is headquartered in Mumbai, India. TransUnion CIBIL collects, maintains, and provides credit-related information on individuals and companies from various financial institutions and lenders in India.

You can get access to your CIBIL Score and personalised Credit Health Report with the Credit Pass. With this credit monitoring subscription, you can monitor the factors that impact your score, view your detailed credit report and unlock access to pre-approved loan and card offers.

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2. CRIF High Mark

CRIF High Mark is a credit information company (CIC) that was founded in 2007. They were awarded their licence to operate in 2010. They are headquartered in Mumbai. The company provides credit information and analytics solutions to banks, non-banking financial institutions, microfinance institutions, and other lending organisations in India.

3. Experian

Experian was established in 2006 and obtained a functional licence to operate in India in 2010. The Experian reports are compiled for individuals as well as for companies. Individuals can access credit information reports that detail the credit history of the applicant. Like CIBIL, Experian assigns its credit reports and credit scores ranging from 300 to 900. Experian also offers analytical tools to its corporate customers.

4. Equifax

This credit bureau was initially a credit-giving company when it started in 1899. Then, in 2010, it became a licenced agency that carries out credit ratings. Equifax also assigns portfolio scores and risk scores along with credit scores for the individuals. Companies or corporate customers also generate risk management reports, credit fraud reports, industry diagnoses, and other portfolio management reports that they might require as per their specific needs.

To conclude, credit bureaus do not have any authority to determine whether credit should be granted to individuals or companies. Rather, their primary focus is on gathering and analysing data and information related to the credit scores of individuals and organisations. The data and analysis by credit bureaus help lenders in their decision-making process.

Credit bureau regulations

Credit bureaus, also known as Credit Information Companies (CICs), are regulated by the Reserve Bank of India (RBI) under the Credit Information Companies (Regulation) Act, 2005 (CICRA 2005).

Who can be a Credit Information Company (CIC)?

The CICRA 2005 Act restricts membership in a CIC to the following groups:

• Credit Institutions as defined in Section 2 (f) of the CIC Act.
• Existing Credit Information Companies as per Section 2 (e) of the CIC Act.
• Specified Users as defined in Section 2 (l) of the Act and Regulation 3 of the Regulations under the "CIC Act" and "CIC Rules," respectively.

Functions of credit bureaus

• Data collection and processing: Credit bureaus gather, analyse, and process individuals' financial information.
• Credit information sharing: They provide credit information to lenders or financial institutions.
• Credit score generation: Credit bureaus generate credit scores for individuals.
• Research activities: They may conduct research projects related to credit.
• RBI-directed activities: They can engage in any other business permitted by the RBI.

Free credit report access

The Act mandates every credit information company to provide one free full credit report (FFCR), including the credit score, annually. This report will be provided electronically upon request if the individual's credit history exists with the CIC.

Credit rating agencies vs credit bureaus

Many confuse credit rating agencies with credit bureaus. However, they are distinct entities serving different purposes.

Credit rating agencies

• Entity focus: Credit rating agencies evaluate the creditworthiness of business entities like sole proprietorships, public and private companies, etc.
• Regulation: They are regulated by the Securities and Exchange Board of India (SEBI).
• Credit rating process: They analyse financial documents and other details like sales, debts, and profits to assign credit ratings to businesses.
• Lender usage: Lenders use these credit ratings to assess the risk involved in lending to a particular business entity.
• Number of agencies: Currently, there are 7 credit rating agencies in India. (List omitted for brevity)

Credit bureaus

• Individual focus: Credit bureaus assess the creditworthiness of individuals.
• Credit report and score: They use various information, such as past repayment history, credit utilization, and outstanding debts, to create your credit report and credit score.
• Number of bureaus: India has 4 credit bureaus: TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. (List omitted for brevity)

Disputing credit report errors with bureaus

Credit bureaus are responsible for not only generating credit reports and credit scores but also for providing support regarding errors in the report. If you find any discrepancies, you can dispute them by contacting the credit bureaus.

Here's how to dispute a credit report error:

1. Obtain your reports: Get your updated credit reports from all credit bureaus. You can get one free report from each bureau annually.
2. Review your reports: Carefully examine your credit report for any inaccuracies like incorrect account details, outstanding balances, or account-related errors.
3. Dispute online: Fill out an online dispute form on the credit bureau's website. Provide details about the errors you identified.
4. Submit the dispute: Review the information for accuracy and submit the dispute form online.

The credit bureaus will investigate your claim by verifying it with the lender. If an error is found, they will update your report and notify you. This process typically takes 30-45 days.