The Reserve Bank of India authorises specialised financial firms known as Credit Information Companies (CICs). They are also known as credit bureaus. These firms collect and preserve data linked to the credit behaviour of individuals and businesses in India.
Credit bureaus like Equifax and CIBIL collect information from banks and lenders all over the country. These credit bureaus are two of the four official sources of credit information in India.
Equifax credit scores and CIBIL credit scores are used by most banks to assess your ability to get a loan or credit card. The borrower’s credit score is based on the interest rate, loan amount, and length of time the borrower has to pay back the loan.
If you’ve ever tried to get a loan or credit card, you know how important a good credit score and history are. A good credit score will help you get a loan from a bank or financial institution.
What Is The Equifax Credit Score?
The Equifax credit score is a three-digit number that can range anywhere between 300 and 900. Its calculation is based on information from credit providers like banks and other financial institutions.
A high credit score shows a possible lender that the person is reliable when it comes to paying back debts. The borrower’s loan application could be approved or denied based on their Equifax credit score.
What Is The CIBIL Score?
The CIBIL score is a three-digit number ranging between 300 and 900 that sums up your credit history and rating. As the number gets closer to 900, a person’s creditworthiness increases.
When you apply for a loan, one of the first things a bank or lender looks at is your CIBIL score. If your CIBIL score is below 300, then the bank may not even look at the application. On the other hand, if your CIBIL score is more than 750, the bank or lender will do more research and look at other factors to decide whether to approve your loan.
The bank that gives out loans or credit cards is the only one with the power to give you a loan or credit card. CIBIL has nothing to do with that. It only assesses your ability to repay the debt on time.
Why Is Your Credit Score Important?
Credit scores and reports are among some of the essential parameters used by financial institutions to assess your capability to repay a loan or debt. Let’s understand why your credit score is so important.
- Your Equifax credit score is a quick way to find out if you have been good with debt in the past.
- A lender will look at your credit report and score before giving you a loan or credit card. Your score is also used to determine the type of loans you can avail of and the interest rates on those loans if you are deemed creditworthy.
- Having a low credit score is not the end of the world. If your credit isn’t too bad, you may still be able to get a loan. But you should know that the terms associated with your loan or credit card may be much stricter.
- Maintaining a high credit score is essential as you build your credit history. Banks and other financial institutions use credit reports to find out if the borrower can pay their debt on time.
Equifax or CIBIL — Which Score Is Required?
Ideally, you’d need a credit report from one of the two bureaus. This can be either CIBIL or Equifax. Getting messages from both is the best way to gain a complete view of your credit history.
Credit scores from CIBIL and Equifax can range anywhere from 300 to 900. Since the criteria used by each agency to determine a customer’s creditworthiness can vary significantly, a customer’s credit score may be slightly different on each report.
Equifax Credit Score Versus CIBIL Credit Score
The widespread belief that your credit score is the same no matter where you apply is one of the biggest myths. Since each credit reporting agency uses a unique scoring algorithm and methodology, it is not unusual for a consumer’s credit score to vary. To better distinguish between the credit scores of each agency, let’s take a look at the differences.
|Component of comparison
|Equifax Credit Score
|CIBIL Credit Score
|Credit score range
|300-900.If you have a score of 750 or higher, you are eligible to get a loan, whereas a score of 300 or lower indicates a bad credit score.
|300-900. In the CIBIL scoring system, a score of 750 or more is outstanding, while a score closer to the low end of the scale is not perfect.
|Time taken to receive score
|1 day via email, and 7 days via post
|7 days via post or through email in 1 day
|Demand Draft (DD) only
|All payment methods are accepted
|You can download the dispute form from the website and fill it up. After sending it, a response usually takes 7-14 working days.
|If there is a problem with your CIBIL report, then you can take it up with their team. They will resolve it as soon as possible.
Professional borrowers are the ones who stand to gain the most from the credit arrangement. They know their current credit standing and the actions necessary to qualify for a loan.
If you have a complete picture of your financial situation, you can better manage your credit score and make sound financial choices. Both Equifax and CIBIL offer guidance on how to improve your credit score.
The Equifax credit score and CIBIL credit score are important parameters to get a loan. Visit Piramal Finance for similar blogs and take a look at the various financial services they offer. Their services include home finance, structured debt, senior secured debt, construction finance, business and personal loans, and flexible lease rental discounting.