Credit Bureau

Credit Information Company (CIC) or Credit Bureaus are agencies that collect credit information from lenders and other relevant credit information sources on a borrower's credit history, and provide that information, for a fee, to prospective lenders or specified users. The objective of a Credit Bureau is to assist lenders with relevant and extensive repayment information and to enable lenders to make better and more objective decisions quickly.

The Credit Information Companies Regulation Act 2005 provides for the licencing and operations of credit bureaus in India. In India CIBIL, Experian, Equifax & Highmark are the RBI approved CIC.

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Credit Report

A credit report represents a comprehensive credit profile of a borrower. This includes, for example, personal information (e.g. borrower's name, identity information, date of birth etc.), credit facilities (e.g. credit accounts held by borrower, whether accounts are current/past due) and credit enquiries made about the borrower.

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Most people finance home and car purchases with a bank loan. Sometimes, you take out a study loan to finance a university education. Most often, you may use a credit card to make store purchases. When you apply for these loans and credit facilities, banks, finance companies or retailers will usually grant you credit only after knowing something about you, especially your credit background. A Consumer Credit Report keeps you and the bank updated on your credit standing and supports your application for credit.

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Credit bureaus compile information on account information, credit repayment records, default and suit filed information. All these can be referred to as the credit history of a borrower or consumer.

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Yes. A consumer can obtain a copy of his/ her credit report from CIBIL, Experian or Equifax by submitting a written request for all information pertaining to him or her, which is in the credit bureau's possession. CIBIL also provides an online mechanism for consumers to get their Credit report. 

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Your consumer credit report is used by banks and financing companies to ascertain your credit status and history. This report may also be used when your bank reviews your credit status. A bank or financing company will usually look out for:

1. Repayment status of your credit facilities
2. Any default / derogatory information on these credit facilities
3. Number of existing credit facilities
4. Overdue amounts

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You can improve your credit standing by observing these few simple pointers:

1. Repay outstanding/overdue credit on time
2. Keep the number of credit facilities manageable
3. Check your consumer credit report regularly (at least yearly) to ensure there are no errors reported. This is especially important when you intend to apply for new loans or credit facilities.

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Credit Score

A credit score is a statistically-generated number that indicates an individual's credit worthiness. In other words, it is an indication of the probability that a person will repay a debt extended to them on credit.

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Credit score models cannot generate a score without enough credit information. If an individual has little or no credit history with the credit bureau, a credit score will not be available.

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The Credit Score gives the lender an indication of the potential borrower's propensity to pay, while taking into account the lender's risk appetite. Most businesses that provide credit or loan services use credit scores as a summary to quickly ascertain a consumer's creditworthiness. This translates into efficiency as it can reduce the need to manually review all the details in an applicant's credit report, leading to better, faster decisions.

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A credit score is dynamic. It may change as monthly information is added into a person's credit file. For example, if negative information such as evidence of financial litigation or a payment default is introduced to a consumer's credit file, it may weaken their credit score and impact their ability to borrow.

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Having many credit cards with high balances that are poorly maintained may negatively impact one's credit score, especially if there is a poor history of repayment in other areas.

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Disputes

If there is a complaint such as dispute over the accuracy or completeness of a credit report, a consumer may make a complaint in person or in writing to the credit bureaus. The credit bureaus have a dispute resolution process, wherein they have to rectify the information within 30 days of such citing of inaccuracy. If the consumer is dissatisfied with the outcome after reporting it to the credit bureau, he or she may submit the complaint in writing to the banking ombudsman.

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