Credit rating bureaus in India: CIBIL and Equifax

CIBIL and Equifax

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.

Overview: CIBIL and 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.

Difference between CIBIL and Equifax

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:

Difference between CIBIL and Equifax
  • CIBIL is the first whereas Equifax is the second credit bureau company of India.
  • The cost of the credit report in case of Equifax is Rs. 138 and where a person seeks both credit report as well as the credit score then it shall cost Rs. 400. In case of CIBIL it offers just one credit report which has the credit score in it at a cost of Rs. 500.
  • In case of CIBIL one can make payment through any mode such as net banking, debit card, credit card but Equifax accepts demand draft only.
  • The reports of CIBIL may be taken at any point but Equifax provides you 4 opportunities in a year to get a credit report so that you may keep a check on your financial health. To gain an annual subscription of the Equifax credit report, a payment of Rs. 1000 needs to be made.
  • For availing CIBIL score one is required to log in to the CIBIL website and fill the online application form. There you would be required to answer a few questions regarding the loan and once it is authenticated the credit score and report will be mailed to your mail-id instantly. If this process fails then you would be required to send the application form offline along with relevant documents and once it is authenticated you will receive the hard copy of your CIBIL report.
  • When it comes to availing the Equifax report one requires to fill the KYC form and attest the identity proof which may be a voter id, passport, PAN card etc. and the address proof which can be submitted by way of electricity bill, gas bill, rent agreement, etc. The documents shall be posted with the demand draft to Equifax after which you shall receive your credit report and score.
  • CIBIL and Equifax provide a detailed report but a pictorial representation from the Equifax of the credit report makes it easier to understand.
  • CIBIL possess a large network of clients, partner bank and financial institutions compared to the Equifax.
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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.

Factors that impact your credit 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.

Factors that impact your credit score
  • Payment history

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.

  • Credit Utilization Ratio

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.

  • Age of the credit

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.

  • Total accounts

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.

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Conclusion for CIBIL and Equifax

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.

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