The credit industry is worth crores of rupees. The Securities and Exchange Board of India (SEBI) has authorised four credit bureau in India.
The purpose of a credit bureau or a credit rating agency is to determine the creditworthiness of an individual.
Banks and Non-Banking Financial Companies (NBFCs) refer to the credit score of an individual to check financial information. Such financial data includes the repayment record, credit taken, loans overdue, defaults, and other areas of interest – everything combined forms the Credit Information Report (CIR).
The evaluation of the CIR documents determines the acceptability of a loan application.
Credit Bureau in India
Credit bureaus came into existence in the 80’s. In India, the first credit bureau was established in the year 2000, which is the Credit Information Bureau (India) Limited. Other credit bureaus followed soon after. There are four authorised credit bureaus in India with varying levels of acceptability.
A brief about each is given below.
#1 TransUnion CIBIL
The Credit Information Bureau (India) Limited, very popularly referred to as CIBIL, was established in the year 2000 and is headquartered in Mumbai. Launched in 2007, it became India’s first generic risk scoring model for banking and credit institutions.
Individual CIBIL scores were made available to individuals from 2011. In 2016, TransUnion acquired an 82% stake in CIBIL to become TransUnion CIBIL. TransUnion, established in 1968, is a Chicago-based American consumer credit reporting agency.
The CIBIL score ranges between 300 to 900 with 750+ CIBIL score considered to be an ideal score.
Experian, established in 1996, is a Dublin-based Irish consumer credit reporting agency with information of over one billion people and businesses. RBI granted a full operational license in 2010 even though they were formally registered in 2006.
Similar to TransUnion CIBIL, the Experian credit bureau assesses creditworthiness within a 300 to 900 point scale. It has a tie-up with over 2700 financial institutions.
Equifax, established in 1899, is an Atlanta-based American multinational consumer credit reporting agency with the credit information of over one billion individuals. Their India operations started in 2010 and their credit score assessment ranges from 1 to 999.
It is an independent entity as per the Reserve Bank of India (RBI) and is registered Credit Information Companies Act, 2005.
* TransUnion CIBIL, Experian, and Equifax form the “big three”, that is, they are the largest consumer credit reporting agencies in the world.
#4 CRIF High Mark
Dr. Anil Pandya established High Mark Credit Information Services Private Limited in 2005 with the intention to establish a comprehensive indigenous credit information system for Indian citizens. CRIF, an Italy-based firm, purchased 70% holding in the company in 2014. CRIF High Mark became the revised name of the credit bureau.
A consortium of microfinance institutions are its other shareholders, namely the State Bank of India (SBI), Punjab National Bank (PNB), Edelweiss, Small Industrial Development Bank of India (SIDBI), Shriram City Union Finance, and Alpha.
The credit score ranges between 300 and 900. CRIF High Mark offers both personal credit score and a business / commercial credit score.
Below is a comparison table of the four credit bureaus in India.
Together, all the four form the group of Credit Information Companies (CICs) that cater to the credit information needs of Indian citizens. While CIBIL is the most popular, citizens need to check their credit score in all the four credit bureaus at regular intervals.