What is a Credit Information Company and How does it Work?

Banks and other money-lending institutions take a lot of risk when they give loan to a person especially when the loan is free from collateral. Even the lenders need assurance that the amount which they are lending to the consumers or companies will be repaid after a certain period. To reduce such a risk, the lenders depend on the Credit Information Report (CIR) of independent agencies known as the Credit Information Companies.

CREDIT INFORMATION COMPANY :

Credit Information Companies (CIC’s) are the specialized financial institutions that collect and maintain credit and loan related information of commercial institutions and individuals. On the basis of their financial records, they create a credit Report and Score, which helps the lender and credit grantors to decide whether to accept or decline the applicant’s request for a loan or credit card. This report gives lenders an insight to the applicant’s credit history, which helps the lenders to make an informed decision without putting much effort and wasting time of both the parties.

WORKING OF CREDIT INFORMATION COMPANY :

Member banks, credit card companies, and other financial institutions send financial reports of the registered individuals to all Credit Information Companies on monthly basis. These Credit Information Companies use the collected information to create a credit report. This credit report contains a person’s personal information, payment history, number of accounts, defaults (if any), credit transactions, outstanding loan amount and other such financial information. On the basis of the credit report, credit score is given to an individual. The range for credit score is usually 350-850. The credit score is a reflection of an individual’s credit worthiness. The higher your credit score, the easier your financial journey will be.

When you apply for a loan, the lenders contact the Credit Information Companies to see your credit report and to judge your loan repaying ability. They will lend you money only if they are satisfied with your credit score and credit history. Therefore, your credit score plays a vital role in approval and rejection of your loan or credit card application. Other entities to whom the Credit Information Companies provide credit reports on request includes banks, consumers, credit providers, insurance companies, and collection agencies.

Credit Information Companies in India:

In India, there are four well-known Credit Information Companies, which are listed as follows:

1. Experian

Experian Credit Information Company of India Private Ltd is a commercial financial institution that is undertaken and operated jointly with a number of companies including GUS Holdings BV(Netherlands), Union Bank of India (UBI), Axis Bank Limited, Indian Bank, Federal Bank Limited, Punjab National Bank (PNB), Sundaram Finance Limited, Magna Fincorp Limited, and VIC Enterprises Private Limited. In the year 2010, the financial institution became the first to receive the license under the new Credit Information Companies (Regulation) Act (CICRA) 2005. Established in the year 2006, the Credit Information Company was quick to make its space among the ‘World’s most innovative companies’ in one of the 2014 editions of the Forbes magazine. The Experian offers both comprehensive and detailed credit report. Experian credit score ranges from 330 to 830.

2. TransUnion CIBIL

TransUnion CIBIL or simply known as CIBIL was formerly known as Credit Information Bureau (India) Limited. Founded in the year 2000, CIBIL is the first Credit Information Company of India that has a strong and wide member base of over 950 entities including non-banking financial organizations, both private and public sector banks, house-finance companies, and other financial institutions. It has credit information of over 700 million trades across three divisions namely, Consumer Bureau, Commercial Bureau and Micro Finance Institution Bureau. Using credit information collected across these three bureaus, CIBIL generates a CIBIL credit report. The credit score issued under this credit bureau’s name is known as CIBIL score.

3. Highmark

Highmark or High Mark Credit Information Services is another popular Indian credit bureau that maintains the record of every individual’s and organization’s credit information. Based in Mumbai, the Credit Information Company was founded in the year 2005. Besides collecting and maintaining the credit information, Highmark also offers credit reports and score to its members and individuals. It also helps the lenders and other concerned financial entities to gauge the risk profile individuals and organizations before approving their credit or loan applications.

4. Equifax

Equifax was founded in Atlanta, USA, in 1899. In 2010, the credit bureau was registered as the Credit Information Company in India by the Reserve Bank of India. Headquartered in USA, the company is one of the largest credit agencies in America. Like other Credit Information Companies, Equifax too keeps credit information of individuals as well as big, medium, and small organizations. Equifax via its detailed credit report helps you with relevant consumer information while giving you meaningful insights.

Below is a Comparison describing the main aspects of the four credit information companies.

1. Equifax
Year of Establishment : Registered in India in 2010

Credit Score Range : 300-900

Cost : Free credit report once a year or download Equifax app on your mobile to get full free credit report. Credit Report with Credit Score costs ₹400/-
Only Credit Report costs ₹138/- (including taxes/handling charges).

Credit Report Duration Required to Generate Credit Report    : Your credit report will be dispatched after verification and authentication of the provided documents. You will receive your credit report through post or courier in 7-10 days. If you apply for the full free credit report on your mobile app, you will receive it after 1 day through email.

Dispute Resolution: Download the Dispute Resolution Form from their website. Fill out the form, attach the required documents and send it to the bureau’s address through regular post, courier or speed post.

2. TransUnion CIBIL

Year of Establishment : Founded in the year 2000

Credit Score Range : 300-900

Cost : Free credit report once a year. Credit Report with Credit Score costs ₹550/- Only Credit Report costs ₹164/- (including taxes/handling charges). You can even opt for Bi-Annual Subscription (2 Score Reports) @ ₹800/- or Quarterly Subscription (4 Score Reports) @ ₹1200/-

Credit Report Duration Required to Generate Credit Report : CIBIL takes around 7 days to verify the given documents. Post successful verification, you will receive login credentials to myCIBIL portal by registered post or through mail on your registered email address.

Dispute Resolution : If you have registered and received your credit report on myCIBIL, login to the myCIBIL portal and file for dispute resolution online. If you received your credit report from a lender, get free CIBIL score and report from the CIBIL website to access myCIBIL and then file a complaint online.

 

3. Experian
Year of Establishment : Established in the year 2006

Credit Score Range : 330-830

Cost : Free credit report once a year. Credit Report and Credit Score costs ₹399 (including taxes).Only Credit Report costs ₹138.

Credit Report Duration Required to Generate Credit Report    : Your credit report will be dispatched within 20 business days from the date of receipt of your documents and payment.

Dispute Resolution : Download the Query Application Form online or call at 022-6641 9000 and ask for the form to get it through post. Fill out the form, attach the required documents and send on their address.

 

4. Highmark
Year of Establishment : Founded in the year 2005

Credit Score Range : 330-900

Cost : Free credit report once a year.

Credit Report and Credit Score costs ₹399.

Credit Report Duration Required to Generate Credit Report    : If you are applying for the free credit report online, you will receive it on your registered email address after you have successfully answered the credit report-related questions.​

Dispute Resolution : You can write them an email stating your queries or concerns or call them at 020-67057878.