In today's financial landscape, credit plays a vital role in our lives. Whether you're applying for a loan or a credit card, your creditworthiness is assessed by financial institutions. It is where Credit Information Companies (CICs) come into the picture.
CICs are independent third-party institutions collecting financial data from various sources to form credit reports on individuals and companies. These reports help banks and other financial institutions assess the creditworthiness of borrowers. In India, CICs are licensed by the Reserve Bank of India and regulated under the Credit Information Companies Regulation Act, of 2005.
At Shriram Finance, we understand the significance of credit information in making informed financial decisions. As one of India's prominent non-banking financial companies, we offer a wide range of credit solutions, including loans for commercial vehicles, two-wheelers, cars, homes, gold, personal loans, and small businesses, as well as fixed deposits and recurring deposits.
In this article, we will provide an overview of CICs in India and delve into their functioning. We will also discuss the major players in the industry, such as CIBIL™ (Credit Information Bureau India Limited), Equifax, Experian, and CRIF High Mark. Additionally, we will examine how CICs compile data to generate credit reports and scores that influence lending decisions.
What are Credit Information Companies (CICs)?
Credit Information Companies in India are independent third-party institutions collecting and compiling financial data about individuals, including their loan details, credit card history, and more. This information is then shared with the CIC's members, which typically include banks and non-banking financial institutions. Based on the data, CICs generate Credit Company Reports (CCR).
The CCRs play a crucial role in assessing an individual's creditworthiness. These reports help banks and other financial institutions make informed decisions when granting loans or credit cards. By providing accurate and reliable financial information, CICs enable lenders to assess the risk associated with each borrower and make responsible lending decisions.
Credit Information Companies Regulation Act (CIC Act)
The Credit Information Companies Regulation Act, 2005 is a legislation enacted by the Government of India to regulate the actions of CICs in the country. The act aims to ensure the fair and responsible collection, maintenance, and dissemination of credit-related information by CICs. Under this act, the Reserve Bank of India (RBI) is responsible for licensing and regulating CICs in India. In addition to the CIC Act, various rules and regulations issued by the RBI govern the operations of these companies.
The act provides a framework for data protection and privacy to safeguard individuals' financial information held by CICs. It also outlines guidelines for dispute resolution between CICs and their members. The subsequent Credit Information Companies Regulations and Rules Act, of 2006 further refines the regulatory framework for CICs in India.
List of Credit Information Companies in India – 2023
As of 2023, there are four major credit score companies in India: CIBIL™, Equifax, Experian, and CRIF High Mark. These companies play a crucial role in providing credit information services to individuals and enterprises across the country.
CIBIL™ (Credit Information Bureau India Limited) is India's first CIC, founded in 2000. It has a strong member base of over 900 institutions and offers comprehensive credit reports, including the widely recognised credit score.
Equifax India, established in 2010, is a joint venture between Equifax Inc., USA, and leading Indian financial institutions. It provides credit reports and scores for individuals and addresses the needs of Microfinance Institutions through a dedicated bureau.
Experian Credit Information Company entered the Indian market in 2006 as a joint venture with multiple banks and financial institutions. It offers credit reports and scores for individuals and companies to support informed credit decisions.
CRIF High Mark is India's first full-service credit bureau, offering comprehensive credit information services across various borrower segments, including retail consumers, MSMEs, commercial borrowers, and microfinance borrowers. Let's learn about the 4 credit information companies in India.
Equifax
Equifax credit information company, is one of the oldest CICs, having been established in Atlanta in 1899. In India, it received its Certificate of Registration from the Reserve Bank in 2010. Equifax specialises in addressing the lending and regulatory needs of Microfinance Institutions (MFIs). The company charges a fee of ₹138 for a basic credit report and ₹400 for a credit score.
Equifax credit information services company collects credit data from various authentic sources provided by financial institutions. It then compiles this information to generate comprehensive credit reports helping lenders assess an individual or company's creditworthiness. Equifax provides valuable insights into an individual's payment history, outstanding loans, defaults, and more.
By leveraging advanced algorithms, Equifax calculates accurate credit scores to measure an individual's creditworthiness. These scores help lenders make informed decisions when granting loans or credit cards. Equifax's long-standing reputation and experience in the industry make it a trusted source of credit information for both lenders and borrowers.
Experian
Experian Credit Information Company, established in 2006 as a joint venture with multiple banks and financial institutions, is a leading player in the credit information industry globally. Experian was named one of the "World's Most Innovative Companies" by Forbes magazine in 2014.
Experian prepares credit reports for individuals based on information provided by banks and other financial institutions regarding their financial history. The company charges a fee of ₹399 for a credit report and score, whereas a credit report alone costs ₹138.
The comprehensive credit reports prepared by Experian provide detailed insights into an individual's credit history, including their payment behaviour, outstanding debts, and defaults if any. This information helps lenders evaluate an individual's creditworthiness accurately.
Experian Credit Score India provides a numerical representation of an individual's creditworthiness, making it easier for lenders to assess risk and make informed lending decisions. With its global expertise and innovative approach to credit information services, Experian has become a trusted partner for both lenders and borrowers in India.
CRIF High Mark
CRIF High Mark is India's first full-service CIC, offering comprehensive credit information services across various borrower segments. The company caters to retail consumers, MSMEs, commercial borrowers, and microfinance borrowers.
Apart from providing credit reports and scores, CRIF High Mark offers advanced analytics, insights, data management solutions, and software to banks, NBFCs, Housing Finance Companies (HFCs), insurance companies, and telecom service providers, among others. This additional range of services helps these institutions make better credit decisions and manage risk effectively.
CRIF High Mark's credit reports cover a wide range of information, including an individual's payment history, outstanding debts, defaults, and more. These reports provide lenders with valuable insights into an individual's creditworthiness.
With its comprehensive credit information services and a diverse range of solutions, CRIF High Mark credit information services enable financial institutions to streamline their lending processes and make informed decisions. The company's commitment to providing accurate and reliable credit information has made it a trusted partner for lenders across various sectors.
TransUnion CIBIL™
TransUnion CIBIL™ Limited, formerly known as Credit Information Bureau (India) Limited, is one of the most trusted CICs in India. With over 1000 million individuals and businesses in its database worldwide, TransUnion CIBIL™ maintains one of the largest consumer credit information repositories.
TransUnion CIBIL™ has an extensive member base including major banks, financial institutions, HFCs, and NBFCs. The company generates the widely recognised credit score, which measures an individual's creditworthiness accurately. It also prepares Credit Information Reports (CIR) and specialised commercial reports for enterprises.
By combining vast amounts of credit data from various sources, TransUnion CIBIL™ offers lenders valuable insights into an individual's financial behaviour. The credit score is a three-digit number that allows lenders to quickly assess the creditworthiness of a borrower before granting loans or credit cards. A higher credit score indicates a lower credit risk for lenders.
As a leading Credit Information Company in India, TransUnion CIBIL™ plays a vital role in facilitating responsible lending practices and ensuring fair access to credit for individuals and businesses alike.
How do Credit Bureaus in India Work?
Credit bureaus in India gather financial information from lenders to create credit reports and scores for individuals. They evaluate payment history, credit utilisation, loan accounts, and more. These reports help lenders assess creditworthiness. The Credit Information Companies Regulation Act regulates their operations, ensuring data accuracy and protection
CICs gather data from various sources, such as banks, financial institutions, and credit card companies, to create comprehensive credit reports for consumers. These reports contain credit scores and histories, helping lenders assess creditworthiness. CICs ensure data accuracy, update information regularly, and provide credit reports to authorised entities. They operate under strict rules and regulations to protect consumers' privacy and ensure fair credit reporting practices.
Rules and Regulations of CICs
- Data accuracy: CICs must ensure the accuracy of the information they collect and maintain to prevent inaccuracies affecting individuals' creditworthiness.
- Data security: CICs must safeguard the confidentiality and security of the data they handle to protect consumers' sensitive information.
- Consumer access: Regulations typically require CICs to provide consumers with access to their credit reports and scores, allowing them to dispute inaccuracies.
- Fair Credit Reporting Act (FCRA): In the United States, CICs are subject to the FCRA, which outlines procedures for collecting, reporting, and using credit information fairly.
- Consent and authorisation: CICs must obtain consent from individuals or businesses before collecting and sharing their credit information.
- Dispute Resolution: CICs must have mechanisms in place to investigate and address disputes regarding the accuracy of credit reports.
- Data Retention: Regulations often specify how long CICs can retain credit information, typically seven to ten years for negative information and longer for some types of bankruptcies.
- Non-discrimination: CICs must ensure credit reporting does not discriminate against any particular group or individual.
- Reporting limitations: Regulations may impose restrictions on the types of information that can be reported, such as limiting the reporting of certain types of debt after a specific period.
- Supervision: Regulatory authorities oversee CICs to ensure compliance with these rules and protect consumers from unfair practices.
Who has access to these reports?
In India, credit reports compiled by Credit Information Companies (CICs) are accessible to both lenders and individuals. Lenders, such as banks and financial institutions, use these reports to assess an individual's creditworthiness before approving loans or credit applications. Additionally, individuals have the right to access their credit reports to review their financial history and ensure accuracy. This transparency promotes responsible borrowing and helps individuals understand their financial standing
Key Highlights:
- Credit information companies play a crucial role in assessing an individual's or company's creditworthiness.
- The RBI regulates and licenses these companies.
- Four major CICs are operating in India: CIBIL™, Equifax, Experian, and CRIF High Mark.
- Credit reports from these CICs are considered reliable by lenders.
- These companies collect financial data from various authentic sources to compile comprehensive credit reports and scores.
Conclusion
In conclusion, CICs are essential credit institutions in India's financial landscape. These companies compile and maintain comprehensive credit information about individuals and businesses, enabling lenders to assess creditworthiness accurately. The Credit Information Companies Regulation Act, 2005 governs the actions of CICs in India, ensuring the fair collection and dissemination of credit-related information.
Credit reports from these CICs provide lenders with detailed information about an individual's payment behaviour, outstanding debts, defaults, and more. Lenders can use this information to make informed decisions when granting loans or credit cards.
Credit scores generated by these CICs provide a numerical representation of an individual's creditworthiness. A higher credit score signifies greater creditworthiness and increases the chances of loan approval at favourable terms.
At Shriram Finance, we understand the importance of credit information and offer a range of tailored credit solutions. Whether it's loans for commercial vehicles, two-wheelers, cars, homes, gold loans, personal loans or small business loans – we have you covered. We also provide fixed deposits and recurring deposits with attractive interest rates. Apply for a commercial vehicle loan today and get started on your business journey.
