- A detailed look at credit score generated by top credit bureaus in India - CIBIL, Experian, Equifax, CRIF HIGH MARK
- Check out the history of credit bureaus, their present profile, along with several other vital information
‘Credit Score’ in India is a defining aspect for all those applying for loans or credit cards at banks and other financial institutions. Credit aspirants are judged on this score which is assigned to them by credit bureaus such as CIBIL, Experian, Equifax, CRIF High Mark, etc. The score is a numerical representation of your creditworthiness. Based on your score, the lender decides whether it should offer you loans or credit cards. The score is assigned to all those having a repayment track of at least 6 months to a year.
Table of Contents
- 1 How Much Credit Score Do You Need to Get Approval for Loans or Credit Cards?
- 2 What is a Credit Report?
- 3 Credit Score Improvement Tips
- 4 Credit Score Calculation
- 5 New to Credit? What Should You Do to Build It?
- 6 About TransUnion CIBIL
- 6.1 History of CIBIL Credit Score in India
- 6.2 How Can You Check Your CIBIL Score & Get CIBIL Credit Report?
- 6.3 Credit Score Subscription Models on CIBIL
- 6.4 Check Your CIBIL Credit Score for Free at Wishfin!
- 6.5 Does CIBIL Have a Dispute Resolution Mechanism for You?
- 6.6 What Happens Post the Submission of Dispute Form?
- 6.7 Who is Eligible to Gain Membership from CIBIL?
- 6.8 How Does the Membership Help All Parties – Lenders, CIBIL and Consumers?
- 6.9 How Can Banks or Financial Institutions Gain CIBIL Membership?
- 6.10 Annual & Membership Fees
- 7 About Experian Credit Score in India
- 7.1 How to Get Your Credit Score & Credit Report at Experian?
- 7.2 Wishfin Offers You Experian Credit Score & Credit Report Check for Free!
- 7.3 How Does the Experian Go About Generating Your Credit Score in India?
- 7.4 Found Errors in Your Credit Report? Raise the Dispute at Experian
- 7.5 Accomplishments of Experian at a Glance
- 8 Equifax
- 8.1 How to Get Credit Score & Report on Equifax?
- 8.2 What if You Have Enquired in the Past?
- 8.3 Email Address Where You Can Ping Your Query
- 8.4 Where to Send Your Credit Enquiry Request if You Opt for Postal Services?
- 8.5 Can You Complain Against the Inaccuracies in Equifax Credit Report?
- 8.6 Acceptable Identity & Address Proofs
- 9 CRIF HIGH MARK
- 10 Credit Score in India is Largely Based on Credit Information Companies (Regulation) Act, 2005
- 11 How Does the Exchange of Credit Information Help Lenders?
- 12 Does Sharing of Credit Information Help the Government Achieve its Objectives?
How Much Credit Score Do You Need to Get Approval for Loans or Credit Cards?
A credit score in India ranges from 300 to 900. Scores above 750 are considered good to get approval for most credits. Unsecured debts such as personal loans and credit cards require you to have a score of 750 and above. However, secured debts such as home loan and loan against property can be financed with a lower score. Your home acts as a mortgage for the loan you get from lenders.
What is a Credit Report?
A credit report gives lenders an extensive look into the credit history of individuals. The details of your loan/credit card payments, the payment dates, instances of skipped payments, extent of credit limit utilization, and settlement of debts, if any, will form the part of your credit history. All these details help lenders make a sound decision on credit sanctioning to individuals.
Credit Score Improvement Tips
Credit score can be below the desired level because of several reasons. This is where a credit report can be handy as it will indicate the precise reason. You need to work on those to get your score up over time. Reasons could be payment delays, excessive credit limit utilization, debt settlement, etc. Keeping in mind the usual problems that borrowers find in their credit report, we have charted out certain improvement tips for you.
- Pay Loan EMIs & Credit Card Dues on time
- Keep the credit limit utilization to below 30%
- Say ‘No’ to multiple credit applications
- Maintain a good gap between the credits
- Don’t exercise debt settlement option
Pay Loan EMIs & Credit Cards Dues on time
Ensure you pay all your loan EMIs and credit card dues on time. For that, you need to rejig your ongoing expenditure, apply some curbs on it till the time debts are paid off. This is where you need to define your income differently. See the income post the Loan EMI or the monthly credit card outstanding as your earnings and spend accordingly. This will most likely help you pay on time and get your score up.
Keep the credit limit utilization to below 30%
With credit cards come the splurge amongst many and they start bumping out the credit limit like anything. Excessive credit utilization raises the bill considerably higher and increases the possibility of payment defaults on the part of shoppers. It is, therefore, recommended to maintain a credit utilization ratio of below 30%.
Say No to Multiple Credit Applications
Multiple credit applications mean there will be multiple hard credit checks by the lenders, thereby reducing your score greatly. This only enhances the scope for rejection.
Maintain a Good Gap Between Credits
You should maintain a good gap between credits so that the effect of hard credit checks by lenders will have a minimal impact on your credit score.
Don’t Exercise Debt Settlement Option
Debt settlement is an exercise by which you agree to pay a reduced amount to the lender. After you pay the agreed amount, your credit record will have a mention of ‘Debt Settled’. This may or not reduce your credit score in India, but will add a blot to your credit profile. So, you should try your best not to get into this situation. Instead, stay disciplined and pay your dues on time.
Credit Score Calculation
Bureaus calculate your credit score in India based on the number of credit accounts you have, your payment history, credit mix, years of servicing debt obligations, the amount you have owed, etc.
|Amount owed by borrowers||30%|
|Number of years servicing the debt||15%|
|Number and amount of recent loans availed or applied for||10%|
New to Credit? What Should You Do to Build It?
If you haven’t had a credit card or loan payment experience, there won’t be any credit score for you! You can thus build it using the following –
- Opt for a Secured Credit Card Against Fixed Deposits
- Take a gold loan
- Go for a 2-wheeler loan
- Go for a Consumer Durable Loan
The first two are secured credits and can be given to all, whereas, the remaining two are small-ticket loans that lenders don’t find it that risky to offer even if you do not have a credit history.
Just ensure you pay the dues arising out of the same on time. This will ultimately help build your credit score and a strong one too.
Salary account holders and those working in top corporates can still get credits despite not having a credit history.
After an exhaustive look into the credit score, its calculation and other critical aspects, it’s time to check the modus operandi of credit bureaus that assign individuals with their respective credit score.
About TransUnion CIBIL
TransUnion CIBIL is one of the leading credit information companies in India offering credit scores to individuals. It claims to have the widest repository of consumer information globally. It has more than 5,000 members including the top banks, non-banking financial companies (NBFCs), Housing Finance Companies (HFCs) and financial institutions. CIBIL maintains credit records of more than 1000 million individuals and business enterprises. The credit bureau offers cutting edge credit information to its clients, helping them devise effective lending strategies to reduce costs and increase profitability.
History of CIBIL Credit Score in India
TransUnion CIBIL Limited, previously known as Credit Information Bureau (India) Limited, was formed on the basis of RBI Siddiqui Committee recommendations in 2000. The year 2004 saw the launch of credit bureau services (consumer), followed by the commencement of commercial bureau operations in 2006. A year later in 2007, India’s first generic risk scoring model for banks and financial institutions was introduced with the name ‘CIBIL Score’.
CIBIL Detect and CIBIL Mortgage Check were launched in 2010. While CIBIL Detect is India’s first repository for information on high-risk activity, CIBIL Mortgage Check is the first centralized database on mortgages in the country. Individual consumer scores started getting available from 2011. TransUnion bought a 92.7% stake in CIBIL in 2017.
How Can You Check Your CIBIL Score & Get CIBIL Credit Report?
You first need to create an account on CIBIL before you can check your credit score online.
Account Creation Procedure
- Visit the official website of CIBIL
- Click on the link for free annual credit score & credit report
- Enter your email address
- Create Password having a specified combination of numerics, alphabets and special characters
- Provide your First Name and Last Name
- Choose any one from these ID Types – Permanent Account Number (PAN), Passport, Voter ID, Driving License and Ration Card
- Write down the number of the ID Type you have chosen
- Enter your Date of Birth in the DD/MM/YYYY format
- Type the Pincode & Mobile number
- Click on the ‘Accept & Continue’ button
Now, you need to verify the details you have entered and go to the next stage where you’ll need to mention credit-related information about yourself. CIBIL will authenticate the details before showing your credit score in India.
Credit Score Subscription Models on CIBIL
CIBIL, currently, offers three subscription models – Premium, Standard and Basic Let’s check out the table showing the offers across each of these subscription models.
|Validity Period||1 Year||6 Months||1 Month|
|Cost||INR 1,200||INR 800||INR 550|
|Credit Monitoring Services||Available||Available||Available|
- Alerts – Whenever your credit profile changes, you’ll get alerts on your registered mobile number from CIBIL
- Unlimited Access – You can check the credit score n number of times for the time the subscription offer is valid.
- Score Simulator – It is a feature by which you can get to know the impact on your credit score based on the credit actions you take.
- Credit Monitoring – Subscribers will get a detailed analysis of credit scores, enjoy the privilege of dispute resolution, and much more.
- Loan Offers – You will also be updated on various loan offers if and when they come to you.
Check Your CIBIL Credit Score for Free at Wishfin!
Wishfin is the first official partner of CIBIL having got the right to distribute credit scores and reports of individuals generated by the noted credit bureau. You can check your credit score and credit report for free at Wishfin. Just a few steps and it’s done!
- Visit the official website of Wishfin
- Go to ‘CIBIL Score’ page
- Mention your name as shown on your PAN card
- Provide your date of birth and PAN number
- Enter your mobile number, email address and residence details
- Click on the checkbox for acceptance of terms & conditions
- Submit the details
Does CIBIL Have a Dispute Resolution Mechanism for You?
Yes, it has. So, if you see any inaccuracies in your credit report, you can complain about it by using the ‘Dispute Resolution’ mechanism. You will ask, how will you approach it, right? Well, you can check out the steps below and follow the same in real-time.
- Login to myCIBIL
- Click on ‘Credit Reports’
- Go to Dispute Center
- Click on Dispute an Item
- Fill the dispute form online
If the dispute pertains to ownership or duplicacy, choose the dispute type and submit your form. In case the dispute is about data inaccuracies, you’ll need to enter a value for the disputed field before submitting the form.
What Happens Post the Submission of Dispute Form?
After you submit the form, CIBIL will take the matter to the respective lender. Now the lender can either accept or reject the dispute based on the information you furnish in the form. Whatever will be the decision of the lender, you will get to know in about 30 days.
Who is Eligible to Gain Membership from CIBIL?
The CIBIL membership can be given to the following –
- Banks, housing finance companies (HFCs), non-banking finance companies, public financial institutions offering credit cards and loans to individuals and businesses
- Insurance companies
- Credit rating agencies
- Asset reconstruction companies
- Telecom service providers
How Does the Membership Help All Parties – Lenders, CIBIL and Consumers?
The benefits to lenders and CIBIL are more explicit than consumers at the first place. As a consumer, you need to read between the lines to figure out your benefits. So, check out the pointers as they come next to your screen.
Information-based Credit Decisions – Credit decisions have moved on to a more information-based than relationship-based. This has opened up the windows for worthy customers, which in the yesteryear era had to live with limited credits, to get adequate credits at attractive terms and conditions. In a way, it’s a warning for those relying solely on their cordial relations with lender executives and not on maintaining a smooth credit record.
Credit-Risk Mitigation – Loans and credit cards come with a fairly greater degree of default risk if they are granted to customers with a poor credit record. This is where lenders can have a distinct advantage by evaluating candidates based on their credit record. This ultimately allows them to find credit-worthy candidates and reduce the risk greatly.
Faster Processing – Credit information reports from CIBIL give an exhaustive analysis of the credit behaviour of individuals, thereby eliminating the need for additional research on borrowers. This makes the process fast and cost-efficient for lenders. As a consumer, you are likely to get loans and credit cards faster with the tie-up between lenders and CIBIL.
How Can Banks or Financial Institutions Gain CIBIL Membership?
The membership ensures the compliance of these institutions to Credit Information Companies (Regulation) Act 2005. The institutions will have to provide a list of documents to CIBIL.
- A duly filled and signed form by the bank or financial institution
- Letter of Application on the letter head of the bank or financial institution
- Signed and stamped Pricing Annexure
- The member has to sign and stamp Operating Rule Book
- Copy of Letter of Authority to be issued by the bank or financial institution
- Certified true copy of the license issued by the RBI to HFC; the member has to sign and stamp it
Annual & Membership Fees
Membership Fee – INR 10,000 + 15% Tax
Annual Fee – INR 5,000 + 15% Tax
The payment has to be made by cheque or demand draft issued in favour of TransUnion CIBIL Limited.
About Experian Credit Score in India
Experian is arguably the global leader in offering credit reports to individuals and businesses. It has attained this position thanks to its intensive data and analytical tools it offers to its clients. These tools help its clients find the right candidates for loans and credit cards. Experian’s India operation is named as Experian Credit Information Company of India Pvt. Ltd. Having commenced its operations in 2010, Experian has tied-up with more than 5,000 banks and financial institutions in India. It has a database of more than 430 million loan records.
How to Get Your Credit Score & Credit Report at Experian?
You can log on to the official website of Experian to get your score and report. Just look below the details you need to fill before to get the same.
- Enter your full name as per PAN Card
- Provide your email address
- Enter your mobile number
- Type the One-time Password received on your number
- Provide your date of birth and select your gender
- Enter your PAN number
- Provide your address
- Click on checkbox stating about terms and conditions
- Click on ‘Get Report’
Wishfin Offers You Experian Credit Score & Credit Report Check for Free!
Yes, you can!. Just a few steps and the score & report will be there to see
- Visit the official website of Wishfin
- Go to ‘Experian Free Credit Score Check’ at the bottom
- Enter your personal details such as your first name, middle name and last name, mobile number and date of birth at their respective space
- Click on ‘Submit’ at the bottom
- Enter the One-time Password (OTP) received on your mobile number
- Enter your PAN number, date of Birth, as well as your residence address
- Click on ‘Submit’
- A new page will open asking you to enter loan and credit card details
- The credit details you enter will get validated before you could see the score and report on your screen.
How Does the Experian Go About Generating Your Credit Score in India?
Experian uses a professional approach to offer quality credit reports to its clients so that they make informed decisions about sanctioning loans and issuing credit cards. There are five different methodologies it uses in its credit reporting process.
- Customer Acquisition
- Customer Management
- Credit Market and Portfolio Insight
- Bureau Analytics
- Market Insight and Economics
This includes the following approaches –
- Experian Credit Information Report – The report will show the account and report summary, credit account details, enquiry details, bureau score. For commercial Credit Information Report (CIR), the credit bureau provides details of cheque bounces, security charge, and relationship segment.
- Bureau Score – Experian generates the credit score in India based on your credit actions. So when you apply for a loan or credit card, the respective lender can take note of the score and decide whether you are the worthy candidate.
- Experian Geo Profiling – This reporting service provides member banks and financial institutions with the consumer credit distribution analysis across risk groups and products by pin codes. It helps lenders figure out the products to focus on, the new markets to foray, the risk mitigation strategies to adopt, the products to pitch for new business, and look for upsell and cross-sell. The integration of Geo Profiling with Bureau Score helps lenders figure out customized offers. It further helps to devise region-based credit policies.
- Income Segmentation – This process involves the compilation of all customer relationships and shows the exact potential of the customers, helping lenders figure out cross-sell opportunities. Cross-sell happens between lenders and their existing customers.
- NTC Score – This score index indicates the relative risk of customers who do not have any bureau presence or their credit history is not reported in the bureau for the last 36 months, by the time they apply for loans or credit cards. In other words, it applies to new customers.
- FI Waiver Score – It tells the residence stability of customers based on the addresses, phone numbers or identity proofs reported in the bureau at the time of identification. So when you apply for credits, the bureau will see whether the address and identity remain the same as what it was at the time of identification. This will help the bureau gauge stability. What this does is reduce the cost of verification and the turnaround time for loan disbursals.
- Leverage Score – It predicts the risk arising from high levels of indebtedness and finds highly leveraged individuals with no indications of payment difficulties presently.
This also involves the Bureau Score and Leverage Score, besides several different approaches. Such approaches are shown below, take a look.
- Account Review – Banks and NBFCs use this to segment customer portfolios differently and review them periodically to ascertain credit strategies that align with their internal credit policies. This will help these lenders find out the customers that pose no or very minimal risk to their earnings. It ensures the effective utilization of resources and deepen customer relationships to achieve higher profits.
- Skip Trace – Lenders use the Skip Trace of Experian to devise a debt recovery plan for customers not making payments.
- Portfolio Benchmarking Reports – These reports help lenders gauge the efficacy of their credit policies and get insights into their overall portfolio. So, if the lenders find you aligning with their internal goals, you are in for some exciting credit deals.
- Triggers – The name suggests in itself. Whenever there will be changes in your credit behaviour, lenders will get to know of them using Experian Triggers. They do so to avoid possible credit defaults in the future.
Credit Market and Portfolio Insight
The increasing competition throws up the challenge to innovate and stay ahead of the curve. And the credit market is no exception. If you talk about India’s credit market, it is massively fragmented with several large, mid and small firms vying against each other to buy out customers. So, if the lender does not improve on its product offerings, it might lag behind. To ensure it does not happen, lenders use Credit Market and Portfolio Insight to get quantitative analysis, helping them make fine changes to their operational methodologies and walk with the changing times
Experian does the hard yard of using complex analytics to make intelligent data models as well as predictive scorecards.
Market Insight and Economics
This helps lenders figure out where they stand in comparison to their peers. Further, lenders can know the impact of the change in their credit policy, external factors and regulation on their performance. Banks and other financial institutions will use such insights to redesign their lending products to match the emerging needs of the customers.
Found Errors in Your Credit Report? Raise the Dispute at Experian
You can do so in the following steps.
- Login to your Experian account
- Go to ‘Dispute’ and then to ‘Raise a Dispute
- Enter ERN, UTI which must be there in the right-hand side of your Experian Credit Report
- Select the dispute matter i.e. which – credit or personal details – you would like to correct
- Click on the ‘Submit’ button
Post submission, you can track the dispute status by going to ‘Track Dispute’. You can also email it to customer.support @in. experian.com or dial 02266419000 to know the status.
- ERN – Experian Report Number (ERN) represents a unique number recorded on the credit report prepared by the credit bureau. It’s a 15-digit number that you can see on the Experian Credit Report
- UTI – Unique Transaction ID (UTI) is a unique reference number to validate your information.
Accomplishments of Experian at a Glance
- Has a base in more than 44 countries
- More than 12,000 clients globally
- Over 350 issued and pending patents
- Supported as much as 45,000 fraud victims in the last year
- Received one of “World’s Most Innovative Companies’’ 2018 honour from Forbes
Equifax is a global giant having been in the credit reporting service space for around 117 years. But its India operation started a decade back in 2010. Registered as Equifax Credit Information Services Private Limited and Equifax Analytics Pvt. Ltd, it partners some of the incredibly sound financial institutions such as State Bank of India (SBI), Bank of Baroda (BoB), Kotak Mahindra Prime Limited, Sundaram Finance Limited, Bank of India, etc.
Equifax strengthened its presence in India by acquiring an analytics firm. The acquisition has allowed Equifax to provide some the best in class customized solutions, helping both lenders and borrowers in equal measure. The unique insights and proprietary tools of Equifax have been instrumental in offering customized solutions to the Indian consumers.
How to Get Credit Score & Report on Equifax?
Checking the Equifax Credit Score in India is slightly different here compared to the previous two bureaus. Here, you need to fill the Credit Report Request Form and send it along with relevant documents to Experian via email/registered post. Download the form online, take a print out of it and fill in the details such as your name, address, date of birth, gender, mobile number, email address.
Choose any of PAN Card, Passport, Voter ID and Driving License as your identity proof. However, it is recommended to have PAN card details mentioned. Self-attest the document you want to send. For address proof, you can choose any of the Electricity Bill, Telephone/Mobile Bill, Gas Utility Bill, Credit Card Statement, Driving License, Ration Card, Registered Rent Agreement.
What if You Have Enquired in the Past?
If you have enquired for your credit report in the past, you need to mention the Credit Report Order and Referred by Source in their prescribed space. Affix your signature and put the date at the appropriate space.
Email Address Where You Can Ping Your Query
If you want to email your enquiry, you need to send the credit report request form along with scanned documents to [email protected] This is applicable only to free credit reports.
Where to Send Your Credit Enquiry Request if You Opt for Postal Services?
If you are sending via post, do so at
Customer Service Team
Equifax Credit Information Services Ltd.
931, 3rd Floor, Building 9
Solitaire Corporate Park
Andheri Ghatkopar Link Road
Opposite Mirador Hotel
Mumbai – 400093
Paid credit report (solo) and credit report with score will cost you INR 118 and INR 472, respectively. You need to enclose a demand draft in favour of Equifax Credit Information Services Pvt. Ltd.
Can You Complain Against the Inaccuracies in Equifax Credit Report?
Yes, you can! All you need to do is fill the dispute resolution form, which you can download on the official website of Equifax. Take a print out of it and fill in the form correctly. You need to mention your name, address, mobile number, email address, Credit Report Order. Whatever the query you may have with your credit report, be it your address, credit enquiries, credit account details or even a general query, you need to elaborate them. Sign the form and put a date.
Acceptable Identity & Address Proofs
You also need to attach eligible identity and address proofs along with a duly filled and signed Dispute Resolution Form.
Identity Proof – Any one from Voter ID, Driving License, Passport and PAN Card
Residence Proof – Any one from Electricity Bill, Landline/Mobile Bill, Ration Card, Gas Utility Bill, Credit Card/Savings/Current Account Statement
Send the form along with your documents to the following address via registered post/speed post or a courier.
Customer Service Team
Equifax Credit Information Services Ltd.
931, 3rd Floor, Building 9
Solitaire Corporate Park
Andheri Ghatkopar Link Road
Opposite Mirador Hotel
Mumbai – 400093
CRIF HIGH MARK
Tie-up with 6,300+ banks and financial institutions and having a clientele base of 3,10,000 talk volumes of CRIF HIGH MARK, a noted credit bureau offering the credit score in India and elsewhere in the world. With a presence in 50 plus countries and 4 continents, CRIF HIGH MARK is India’s first full-service credit information company that offers credit reports of all borrowers including MSME and retail clients. The massive customer database of this credit bureau helps lenders make rational lending decisions. Founded by Anil Pandya, CRIF HIGH MARK commenced operations in 2011 after it got the license from the RBI to set up a credit information company, in 2010.
Some of the First of a Kind Service by CRIF HIGH MARK
- First Full Service Credit Bureau of India
- First bureau to have offered microfinance credit reports
- First bureau to have offered comprehensive Credit Information Report on borrowers
- First Bureau to have offered Commercial Score
How Can I Check My Credit Score in India at CRIF HIGH MARK?
Checking credit score at CRIF HIGH MARK is a 4-step process after you click on Get My Credit Score’ on the official website of the bureau.
Step I – Fill in your personal details such as your name, date of birth, mobile number, father name or spouse name, residence address, PAN Card or any other ID number
Step II – Validate your details
Step III – Answer one security credit question
Step IV – Download your credit report that will also show you your score
Tools Used by CRIF HIGH MARK
CRIF HIGH Mark uses the following approaches to generate credit reports of individuals.
- Customer Acquisition
- Customer Management
- Business Planning
- Process Automation
- Due Diligence
This approach is supported by the tools CRIF HIGH MARK uses. These tools include –
- Credit Information – The sharing of credit information gives a complete view of borrowers so that lenders can decide whom to give credit and whom not to. This way lenders can manage their credit risk better.
- ID and Fraud – IDENCHECK and SHERLOCK – The customer identification is established by an online verification against public data sources and the database of CRIF. This helps improve KYC compliance. IDENCHECK helps lenders figure out the application and identity fraud against an industry data pool on identified and suspected frauds as well as other data sources through SHERLOCK, which is an anti-fraud solution that uses sophisticated artificial intelligence and network analysis algorithm
- External Data Connector – This helps automate the access of several data sources including multiple credit bureaus, integrating with your credit source or management system.
Credit-worthy customers are in for exciting deals from lenders which will rely on the customer management solutions of CRIF to retain such clients. This will also help lenders find out the customers who will default later on. The solutions are –
- Portfolio Review – It helps lenders assess the increasing customer relationships as well as the existing portfolio for risks. The review will take into consideration the customer level assessment that helps to classify customers into four quadrants based on how good, bad or both they have been to the lenders while repaying their debts. If your portfolio is found consistently good, you’ll be intimated of several credit deals.
- Alerts and Triggers – The change in the credit history of borrowers is marked by alerts and triggers. So, both positive and negative changes are indicated, helping lenders assess their credit risk situation while also opening up the opportunities of cross selling and others for them to make the most of.
CRIF data, analytics and automation solutions ensure lenders efficiently collect from their customers. These solutions include Alerts and Triggers besides other useful techniques.
- Portfolio Monitoring – Frequent portfolio monitoring and periodic reviews of the customer’s ability to pay back their debts ensure lenders collect well. These methods help eliminate compliance risks, focus on accounts having greater probability of receiving the payments, etc.
- Skip Trace – Additional contact information on non-traceable customers increases the possibility of collecting from customers. Skip Trace makes an iterate search to locate customers in the large database of CRIF and provide lenders with up-to-date contact details, thereby enhancing the efficiency of the collection process.
- Collections Management – This involves efficient management of credit accounts in arrears through a structured definition of tasks, policies and assignments. The automation and efficiency of enforcement and monitoring help lenders take prompt actions and recover debts quickly. It also helps lenders in utilizing their resources efficiently and getting better control over the process.
This helps lenders figure out the areas they should expand into, the customers to target, the loan product which is doing better, their performance and their peer performance, etc. This also helps identify new lending spots across states and districts, thereby increasing the penetration of financial services in the country. So, if you are even living in rural areas, your loan portfolio will be checked and compared with your urban counterparts. In case your loan portfolio is found stronger, you can fetch better deals than someone living in an urban area.
This involves the External Data Connector tool explained above. Barring that, it also features De-duplication and Connect.
- De-duplication – For the unique identification of customers across different portfolios, lenders use OneIdentii to comprehend the total relationship value. The OneIdentii uses several identity resolution algorithms that are suited to the Indian context.
- Connect – It simplifies the process of sharing the commercial, micro finance and consumer data with credit bureaus in the data formats approved by the Reserve Bank of India (RBI). Connect is a user-driven Extract-Transform-Validate tool that uses its easy-to-use rule engine for validating and transforming the data into a credit bureau format with no specific programming effort.
Credit Score in India is Largely Based on Credit Information Companies (Regulation) Act, 2005
The Reserve Bank of India has mandated certain regulations with regards to Credit Information Companies (Regulation) Act, 2005 for credit score in India. Here are those regulations –
- The regulations indicate the companies which can procure credit information as specified users (credit institutions, insurance companies, telecom companies, broker, rating agency, trading member, IRDAI, SEBI, etc.
- Submission of the application, the grant of certificate as well as the form for the submission of the application and the issuance of the certificate also form the part of regulations.
- There’s also a provision of the format in which a credit information company can send a notice to credit institutions or other credit information companies for calling the information.
- The maximum amount charged for specified users while obtaining credit information of individuals and non-individual borrowers should not be more than INR 500 and INR 5,000, respectively.
- Regulations put in place the principles and procedures pertaining to the purpose of collection of personal data, the solicitation of personal data, as well as the accountability in transferring the data to the third party, protection of personal data.
- In the event of any contravention of any provision of the regulations, an individual can complain against a credit institution, credit information company or any other specified user.
How Does the Exchange of Credit Information Help Lenders?
Financial journals often have stories around non-performing assets (NPAs) of banks across the country. These NPAs erode the gains of lenders significantly and even put them on the verge of insolvency. Given the perils that emanate from NPAs, lenders rely on the credit information shared to them by credit bureaus while deciding to disburse loans or issuing credit cards to individuals or businesses. Credit decisions based on credit behaviour often leads to lenders finding credit-worthy customers. It reduces the cost of lenders, increases their profitability and ensures conformity to Credit Information Act, which is more than just a credit score in India.
Does Sharing of Credit Information Help the Government Achieve its Objectives?
The government wants banks to reach the unbanked ones. None better than credit information companies helping them do so by offering credible credit reports of individuals having serviced any kind of debt. The most unbanked, undoubtedly, live in villages. Most of them take farm loans to grow their agricultural produce. When banks will pass on the credit details to credit bureaus, the latter will do a study and assign credit scores to these individuals. As needs enhance with time, maybe they will seek some other credits apart from agricultural loans. This is where a credit score in India generated by sound techniques can make it happen in real-time.