Credit information companies or CICs are the credit health rating agencies who collect individual’s and firm’s financial data related to their loan and debt repayment history and provide these inputs to financial institutions such as banks and NBFCs as Credit Score whenever an individual approaches a bank/financial institution to avail loans.

The repayment capacity can be traced from the loan repayment history of the individual, collected by Credit information companies (CIC). Then these CICs assign points to those individuals often called credit score or credit points etc.

Let’s take a look, what is credit score which is required by the banks when you look for any loan or credit card from the bank.

What Is Credit Score & How To Improve It

A credit score is based on your credit history, like repayment of EMIs and credit card dues. The CIBIL TransUnion score is a 3 digit numeric summary of your credit history (CR). This score is derived by using the details found in the “Accounts” and “Enquiries” section on your Credit Information Report (CIR) and ranges from 300 to 900. The closer your Score is to 900, the more favorably your loan application will be viewed by a credit institution. The Score plays a critical role in the loan approval process. A score more than 700 considered to be good.

Credit Information Companies Regulation Act (CICRA)

CICs acts based on Credit Information Companies (Regulation) Act, 2005 (CICRA) which is binding for the Credit information companies as well as for financial institutions.

As per Section 15 of the CICRA, every Credit Institution (like banks) should be a member of at least one CIC. Besides, CICRA also stipulates that a CIC may seek and obtain information from its members only.

Following the CIC Act, 2005, the RBI and the Government of India enacted the CIC Act, 2006.

List of Credit Information Companies In India

As per RBI, there are four credit information companies working in India viz. Credit Information Bureau (India) Limited, Equifax Credit Information Services Private Limited, Experian Credit Information Company of India Private Limited and CRIF High Mark Credit Information Services Private Limited have been granted Certificate of Registration by RBI. These CICs are different from Credit Rating Agencies in India.

1. Credit Information Bureau (India) Limited

CIBIL or Credit Information Bureau (India) Limited is one of the most prominent credit rating agencies in India founded in 2000, which is associated with a larger number of banks and NBFCs. It provides portfolio review reports services, company credit information reports, etc. Reserve Bank of India (RBI) has mandated banks and financial institutions to check the CIBIL score of every loan / credit card applicant before approving the same as an improvement process to safeguard against banks’ loans into turning into non-performing assets (NPAs).

It is considered to be the first Credit Information Company of India having over 2400 strong member base including public and private sector banks, non-banking financial institutions and housing finance companies now known as TransUnion CIBIL.

CIBIL score, which was launched in 2007, ranges from 300 to 900 and as per CIBIL, a score above 700 is considered good.

2. Equifax Credit Information Services Private Limited

It started operations in India in 2010 and provides a variety of services to individuals such as risk scoring, portfolio reviews, credit information reports, etc. whereas enterprise-level services such as credit and fraud management etc. are provided to companies.

As a consumer credit reporting agency, it collects and aggregates information on over 800 million individual consumers and more than 88 million businesses worldwide. Founded in 1899 and based in Atlanta, Georgia, it is one of the three largest credit agencies along with Experian and TransUnion.

Equifax is considered to be one of the oldest credit information companies in the world.

3. Experian Credit Information Company of India Private Limited

It is an International credit rating and analytics company with over 17,000 employees in 37 different countries. In India, the company provides its services under the name Experian Credit Information Company of India Private Ltd. which is a joint venture with Sundaram Finance Ltd, Indian Bank, Axis Bank, and a few other such entities.

Experian plc is a consumer credit reporting agency. Experian collects and aggregates information on over one billion people and businesses including 235 million individual US consumers and more than 25 million US businesses.

4. CRIF High Mark Credit Information Services Private Limited

It is India’s only “all-rounder” credit rating company that caters to all kinds of borrowers, let it be retail consumers, MSME and commercial borrowers, microfinance borrowers, etc. It provides credit rating and analytics services apart from encouraging a mature credit culture in the Indian economy.

Established in 1988 in Bologna (Italy), CRIF High Mark, a RBI licensed credit bureau in India, with its extensive bureau database provides information and analytical solutions to banks, NBFCs, insurance companies, telecom service providers amongst others. It is present over 20 countries including Italy, India, the Czech Republic, the Slovak Republic, Ireland, Philippines, Jordan, United Arab Emirates, Jamaica, Russia etc.

Other than this, there are six credit rating agencies named CRISIL, CARE, ICRA, FITCH Ratings India Pvt. Ltd, Brickwork Ratings India Pvt. Ltd. and SMERA.

Credit Bureaus Around The World

Since Credit bureaus are new to India, but they have been around for over a century in some countries such as USA and UK.

A credit bureau in USA known as Consumer Reporting Agency whereas it is Credit Reference Agency in UK, and a Credit Information Company (CIC) in India.

Roles and responsibilities of Credit Information Companies

1. Credit information company provides factual data based on loan and repayment scenario of an individual.
2. The credit information provided by the CIC’s is based on credit information only
3. They offer the report to the Banks/NBFC’s based on the knowledge, experience and expertise
4. They create data diligently with the help of technology for helping customers in making intelligent decision in entire stage of customer life cycle.
5. As on the responsibility front, CIC’s do not provide any opinion, indication or comment pertaining to whether credit should or should not be given to the needy in their report. This decision to credit or not to credit is taken by the credit granter only.

CIBIL Score is your rating with banks and financial institutions based on your record of repaying loans/credit card bills and this also show credit health as well. If your repayment track record is good and you do not have too many loans to repay presently, then your credit score is good, and this makes you an eligible customer for bank loans and credit cards. A good credit score assures the bank that you are capable and responsible when it comes to the repayment of any kind of loan from it.

On the other hand, a bad credit score can be one of the major reasons for the rejection of loans /credit card.

Credit score or CIBIL Score or CIBIL

The CIBIL TransUnion score is a 3 digit numeric summary of your credit history. This score is derived by using the details found in the “Accounts” and “Enquiries” section on your Credit Information Report (CIR) and ranges from 300 to 900. The closer your Score is to 900, the more favorably your loan application will be viewed by a credit institution. The Score plays a critical role in the loan approval process.

How to check your CIBIL Score for free?

Reserve bank of India has mandated on January 2017, that all the four licensed credit information companies provide one free credit score and credit report every year to the individuals. The method to check it is given below-

1. Visit CIBIL website to check your credit score (cibil[dot]com/select-plan)
2. Enter a username (first time users should give unique username), password, name, email address and telephone number
3. Click on Continue to Step 2
4. Enter your date of birth, gender, address and select any of the identity proof such as PAN number, passport number, voter ID card number, driving license number, ration card number and given respective identity proof number in the text box
5. Click on I accept and continue to step 3
6. Enter the OTP (one time password) received in your mobile/telephone number and email ID
7. Click on Continue button
8. Click on Dashboard
9. Your Credit score must be appearing in this page, Your CIBIL Score ranges between 300-900, which is calculated basis the information in the “Accounts” and “Enquiry” section of the credit report. The score should be closer to 900 which indicates your ability to repay the loan.

How to improve CIBIL Score?

Here are some of the methods using them you can improve it-

1. If you’ve done any late payments in recent past then your payment history (and also if late payment is a habit) has a direct and major impact on your Credit Score. Hence, if you have missed payments on any of your existing loans, over the last couple of years, your CIBIL Score is likely to be negatively affected because it indicates that you are having trouble servicing your existing obligations.
2. Make a habit to do timely payments on your credit cards. Avoid high Utilization of Credit Limits of your credit cards (though this does not affect the score but when increased spending on your credit cards continues then it results increased repayment burden and may negatively impact your CIBIL Score). Timely payment of your Credit card bills and loan EMI’s is the primary method for the question How to improve CIBIL score? Better to utilize 30% limit of your credit card and pay on time.
3. A higher concentration of home loans or auto loans (commonly known as Secured Loans) is likely to be more favorable for your CIBIL Score than a large number of unsecured loans (like credit cards and personal loans). Although unsecured loans offer easy access to finance, it’s also by far the most expensive forms of credit. More the number of unsecured loans with high utilization, larger are the payments resulting from its high rate of interest. Avoiding unsecured loan could enhance your credit score and another method of how to improve CIBIL score?
4. If you have made many applications for loans, or have recently been sanctioned new credit facilities, a lender is likely to view your application with caution. This ‘Credit Hungry’ behavior indicates your debt burden is likely to, or has increased and you are less capable of honoring any additional debt and is likely to negatively impact your CIBIL Score. So don’t go for loans every now and then so that you can better your credit score and is one of the most experience methods on How to improve CIBIL score?

If you credit history improves, your CIBIL score will also increase.

Also read: Do You Want Your Credit Score? Get It Free On WhatsApp; Know Everything About It