How do Credit Bureaus get your Information?

While applying for a loan or extending the Credit Limit of credit cards, you might have come across Credit Bureaus. Ever wonder how do they get your information to calculate your Credit Score? In this article, we will get into the nitty-gritty of understanding how credit bureaus work in India.

What Credit Bureaus do?

Credit Information Companies (CICs) are RBI regulated institutions that play roles in determining your creditworthiness. Currently, there are four RBI-registered credit bureaus in India- CIBIL Score, CRIF High Mark, Experian and Equifax. These bureaus collect information about your credit cards, loans and other credit lines that help generate your credit score.

The purpose behind creating such centralised bureaus was to improve the functionality and of the Indian Financial System by containing non-performing assets (NPAs) and improving credit grantors’ quality.

Who uses Credit Bureau Data?

A credit bureau is a clearinghouse for credit information about consumers. So, when you apply for credit, lenders depend on the data provided by the bureaus to make their decision whether to lend you money.

Lenders like banks, NBFCs, creditors, check these credit score to decide where to approve your loan, credit card limit, etc. They also decide the interest rates of your loan & credit cards based on your score.

Who are Creditors?

Creditors are public banks, private banks, co-operative banks, NBFCs, foreign banks, housing finance companies, etc. The Reserve Bank of India (RBI) mandates all such creditors to share data of all the existing credit cards and loans of individuals and businesses with every credit bureau at least once every month.

This data also includes borrower's details like personal information, loan availed and the current status of the loan. The data is shared in a standardized format overseen by the RBI.

What is in the Credit Report?

A Credit Report is an aggregation of all your credit history. It includes information such as the number of accounts, types of accounts, credit limit, loan amount, payment history, debt records, etc. Ideally, your report has the entire record of your borrowing and repayment activity on loan and credit card accounts.

Credit Bureau Providing Free Credit Report

There are four RBI-registered credit bureaus in India- CIBIL, CRIF High Mark, Experian and Equifax. You are eligible to get one free credit report every year. So, you can get this privilege and monitor your credit report timely.