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Where a lender (banks or NBFCs) lends its money as a loan to a person, the lender seeks to be assured about the person to whom such loan is granted. The credit information companies or credit rating bureau plays an essential role in this regard. It is a financial institution that determines the creditworthiness of a debtor. It provides scores based on the financial activities of a person. There are four credit rating bureaus in India- CRIF high mark, Experian, CIBIL and Equifax. In this article we shall study and compare CIBIL vs. Equifax.
CIBIL was established in 2000 in India and it is the first credit bureau in India. It gathers and maintains records of payment concerning a person’s loans and credit card. The lenders submit a person’s credit records to CIBIL and the credit bureau uses it to compute their credit score. It is licensed by the Reserve Bank of India and has more than 2400 members.
Equifax was established in 2010 and it collects information provided by its members to produce credit scores and credit reports. It is also licensed by the Reserve Bank of India and has around 1300 members. Equifax uses proprietary tools that are customized to help the lenders make informed credit decisions. The lenders as well as the borrowers can access the credit information provided in the Equifax database.
Both credit bureaus i.e., CIBIL and Equifax offer credit reports that comprise of details regarding the credit history of a customer. However, both differ in the following aspects:
It may be noted that in case of any discrepancy from the CIBIL or Equifax’s credit report then you must communicate the same to them and resolve the matter. The matter shall be resolved within 30 working days.
Read, Also: What are benefits of a Good CIBIL Score?.
In the case of all the credit rating bureaus in India (CRIF, Experian, CIBIL and Equifax) certain factors affect your credit score. These factors are specified below.
It is one of the vital aspects that affect your credit score. If a person is constantly paying off his bills or EMI’s in time then he is considered a safe borrower and has a low risk of defaulting. However, in case of late payments or not paying the payment it will cause your credit score to fall.
It is another critical factor that affects your credit score. Credit utilization ratio means the total amount of credit that one has used in ratio to the total cumulative credit limit available. To maintain a high score 30 to 40% of the credit limit must be used, according to the experts.
To analyze a person’s creditworthiness, his history with credit is also considered. If a person has handled his credit responsibly then it shall have a positive effect on the credit score.
It is essential to have a balance of secured and unsecured credit. The total accounts of a person reflect the experience of that person regarding handling the secured and unsecured form of credit. One must always look to avoid borrowing one form of credit in large quantities as it can hinder the score.
Whenever you want to assess your credit score or report it is advised to check both CIBIL and Equifax credit report as the lenders these days not just rely on a report from one credit rating bureau. They assess different reports to know the credibility of the borrower.
Also, Read: What is CIBIL Score in Layman’s Terms.