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Credit Bureaus – What Do They Mean for You?

Credit bureaus are also known as Credit Information Companies (CICs) in India, are organizations which collect credit data related to loan and debt repayment history for individuals, businesses, and firms. They provide this data to financial institutions such as banks and NBFCs as personal credit score and credit report whenever an individual approaches a bank/financial institution to avail loan and as a business credit score and credit report whenever a business or a firm approaches a bank/financial institution seeking a new credit facility.
                A credit bureau in India is licensed by the Reserve Bank of India and governed under The Credit Information Companies (Regulation) Act, 2005 also known as CICRA 2005. The Act of 2005 was enacted to regulate CIC’s in India and facilitate efficient distribution of credit and for matters concerned with it. RBI has licensed four credit information companies in India, CRIF High Mark is one of the leading ones. These CICs are different from credit rating agencies that operate in India.

How does a Credit Bureau operate:
                 A credit bureau partners with banks, NBFCs, Housing Finance Companies, Microfinance companies, credit card companies, and other financing companies to collect loan and credit card data of all of their customers at least on a monthly basis. The credit bureau processes this data to create credit reports of each such customer.
Whenever an individual/firm applies for a loan or credit with a lender such as a bank, NBFC or any other financial institution, the lender contacts its credit bureau to get the credit score and detailed Credit Report of the applicant. The Credit bureaus only provide information and do not provide any opinion, indication or comment pertaining to whether credit should or should not be granted. The credit grantor such as bank or NBFC which received the application for credit takes the credit decision based on its internal credit approval policy. The policy will consider not only the credit score and the credit history but also many other parameters such as income, income source, collaterals, etc.
                  A credit report depicts the ‘credit history’ of customers listing down all loans and credit facilities availed by the customer, repayment of EMIs and credit card dues on these facilities, and outstanding balances on these facilities.
                  The credit report is also accompanied with a credit score, a 3-digit number which ranges from 300 to 900 where a score of 900 is considered the best possible score; the better the score the more the probability of securing a loan.  A credit score of 700 and above is generally considered acceptable by most banks and NBFCs in India. The score with different bureaus for the same individual could vary to some degree due to the underlying proprietary methodologies.
                  Credit Bureaus also support banks and NBFCs with a variety of value-added services by transforming the data collected into insights and advanced analytics.

Free Credit Score:
              Credit Bureaus also provide a facility on their website to individuals as well as businesses to check their own credit score and credit report. You generally need to buy your credit report and credit score. But if you are an individual, you can access one detailed report, free of charge, once a year, from any of the credit bureaus in India. You can access your personal credit score in three simple steps and get your score in a few minutes. You will have to share basic details such as your name, address, phone number, date of birth, Permanent Account Number (PAN) and email address. If you find any discrepancy in your credit report, you can also rectify any errors that may be there, through a dispute resolution process.

CRIF High Mark:
              CRIF High Mark is an RBI authorized credit bureau in India. It is India’s only multifunctional credit information company catering to all kinds of borrowers, ranging from retail consumers, MSMEs and commercial borrowers to microfinance borrowers & more. It provides credit scoring and analytics services to banks, NBFCs, MFIs, Insurance companies, Fintechs, and Telecom players.
              CRIF, which owns majority in CRIF High Mark, is a leading FinTech from Continental Europe which specializes in credit information, business information, analytics, scoring, decision and credit management solutions. It has operations in over 50 countries across 4 continents. CRIF in India now also offers Business Information Report, Analytics & Scoring services, and Credit Management and Decision solutions.


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