Top Credit Bureaus in India — What Are the Credit Bureaus?

When you apply for a small business loan or even one for a home, lenders look at your credit score before sanctioning and disbursing the amount. Credit scores have an impact on loan approvals and interest rates. You must know what credit score is, how it affects taking out loans, and, more importantly, the factors that decide them.

What is a Credit Bureau?

Credit scores depend on the transactions that a business or person conducts, particularly those related to availing of loans. These transactions may include loans, purchases using credit cards, and overdrafts. So, credit scores may depend on the timely repayment of loans, credit card bills, and utility bills. 

Different agencies collect and analyse this information and create profiles to ascertain creditworthiness. These agencies are credit bureaus, credit score bureaus, or credit report agencies.

In other words, credit score companies in India evaluate your creditworthiness. When doing so, they consider several factors, including loan repayments, defaults, and finances.

What is Credit Score?

Credit Bureaus in India set credit scores depending on the financial information they can gather about the person or business. 

Credit scores are numbers within a specific range, such as between 300 and 900, indicating the date of a person’s financial behaviour. So, while a higher score indicates responsible financial behaviour and lower scores pose risks, it also means you may or may not be eligible to apply for and get a loan.

However, there is more to know about them.

1. You are financially responsible if your credit score is 750 or more.
2. A score between 600 and 750 is considered the median and may be slightly risky. It indicates you may have missed your EMIs a couple of times or not have filed your income tax returns in time.
3. Anything below 600 is poor. You will need to revamp your financial stance quickly and drastically to get back up and qualify for loans.

Top Credit Bureaus in India

Almost 15% of your credit score depends on your credit history. So, the more you overuse your credit, the more debt you carry, and your profile will be at risk.

Credit score agencies in India also run checks on how many banks and NBFC accounts you have, not to mention your credit cards. So, make sure you don’t default on repaying your loans to increase your credit score and avail more loans and credit cards whenever you need them.

Credit report agencies collect and analyse a person’s credit history. However, a Credit Bureau’s job is only to gather and study information about the loans that a person or business avails and suggest changes if required, and not to decide their creditworthiness.

Various Credit Bureaus in India collect and study credit information using different methods.

1. CIBIL

If you ask which credit bureau is the most important in India, the answer is CIBIL.

CIBIL or TransUnion CIBIL, set up in 2000, is the country’s go-to credit bureau. It has a credit database of over 600 million individuals and 32 million businesses. Though the Reserve Bank of India established CIBIL, the Credit Bureau later merged with TransUnion International, a Chicago-based information and insights company, and is now called, the TransUnion CIBIL. You can check your credit or CIBIL score through the official TransUnion CIBIL portal. CIBIL scores depend on various factors such as credit utilisation, payment history, credit mix, and inquiries. So, you can increase your CIBIL score by keeping a healthy credit mix and your credit utilisation at bay, not to mention repaying your debts in time.

2. Equifax

Set up in 1899 as a credit company catering to the retail sector, Equifax is now one of the top credit bureaus in India and across the globe. The credit agency began operations in 2010 and provides credit reports, portfolios, and risk scores.

While CIBIL scores lie between 300 and 900 and closely match credit scores, Equifax scores lie between 0 and 999.

3. Experian

Experian is the first credit bureau licensed under the Credit Information Companies (Regulation) Act (CICRA), 2005. It offers credit reports and scores that match CIBIL scores.

Experian credit reports contain details of your loans, such as the type, disbursal time, repayment history, outstanding debt balances, and defaults, if any. The reports also include inquiries and various analytical and marketing tools and services to help individuals and organisations make informed decisions.

4. CRIF High Mark

CRIF High Mark offers comprehensive credit information to all lending sectors, including MSMEs, commercial and micro-lenders, and retail.

The agency is headquartered in Mumbai and claims to be the first full-service credit agency. It also provides various analytical and data management tools and software to banks, NBFCs, insurance companies, the telecom sector, and more.

These entities can use CRIF High Mark’s software solutions to gather better information and insights about their customers, including their credit, debt repayment histories, and defaults.

How do Credit Bureaus in India Work?

The RBI licenses all the credit bureaus in India. Each agency deploys unique algorithms to determine the credit scores of its customers. Banks and NBFCs provide the information and insights that credit bureaus can use as part of their algorithms to determine creditworthiness. So, each agency comes up with different credit scores.

However, all the scores are valid, although the algorithms deployed vary since they depend on the following five factors.

1. Credit Type
2. Credit Exposure.
3. Age of Credit
4. Payment History
5. Credit Inquiries

Final Thoughts

There are Credit Bureaus not only in India but also across the world. These agencies analyse credit information, mostly transactions related to loans and their repayments, and cater to individuals and businesses.

Credit scores depend on their studies and are integral to the lending process. Banks, NBFCs, and other financial institutions and lenders rely heavily on these credit scores, using the information to determine if a person or business is eligible to apply for and get a loan.

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