While granting loans and credit cards to consumers, banks and other lenders take a huge amount of risk. Lenders expect dues to be paid in time. This is where credit information companies have a role to play.
Credit information companies (CIC) collect and maintain loans and credit-related details of borrowers from banks and financial institutions. These specialized agencies are responsible for generating credit reports and assigning credit scores, which are used by lenders to decide if loans must be sanctioned.
While CIBIL is the most popular credit rating agency, there are other credit rating companies like Experian, Equifax and CRIF Highmark.
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Experian is a major global information services company, which provides data and analytics tools to companies across the World. It is jointly operated by Axis Bank, Punjab National Bank, Sundaram Finance Limited, Magna Fincorp Limited and Sundaram Finance Limited among others. Established in 2006, it offers both detailed and comprehensive credit reports to both individual and institutional customers. The credit scores offered by Experian range from 330-830.
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TransUnion CIBIL was established way back in the year 2000. Back then it was known as Credit Information Bureau (India) Limited. It has a member base of over 950 entities. These include public and private sector banks, NBFCs, HFCs and many other financial institutions. It operates across three divisions:
The credit scores offered by CIBIL range from 300 to 900 and are commonly used by banks and NBFCs.
CRIF High Mark is a Mumbai-based credit information company, which manages the credit reports of Individuals and commercial enterprises. It was founded in the year 2005. Highmark offers credit reports, credit score and also collects and maintains your credit information. This helps banks and other lenders approve credit and loan applications. CRIF High Mark is an RBI approved credit information agency in India. It serves the retail and agricultural sector, MSMEs and commercial and microfinance industries in India.
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Equifax was registered as a credit Information Company in India in 2010, by the Reserve Bank of India. Like CIBIL, Experian and Highmark, Equifax records and maintains credit details of individual consumers and companies and offers a wide array of products like verification services, value-added services, microfinance bureaus, multi bureaus and so on.
The Credit Information Companies Regulation Act, 2005, had been enacted by the Government of India to control and monitor the actions of the credit information companies in India. The Act ensures efficient allocation of credit and contains complex provisions related to protection, accuracy and completeness of credit information collected by the credit information companies.
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Each bank periodically sends credit reports to credit information companies which in turn provide credit scores to individual customers considering several aspects like credit history, number of loans availed and so on. They aggregate and map data and also offer data analytics to individuals and institutions on the basis of the current norms. Data management services are also offered by these companies.
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