People resort to taking credit cards and loans to meet various financial needs. For example, loans enable them to buy a car or a home. Similarly, credit cards help them to book movie tickets or the latest smartphones, and so on.
This is one side of the coin. The other side of the coin is: You ought to have a sound credit score and credit report. These are relied on by various banks and other lending agencies to judge your financial soundness. It gives them a view of your credit history before they grant a loan, for instance.
Generally, credit reports are issued by credit bureaus, Credit Information Companies (CICs), authorized by the Reserve Bank of India under the Credit Information Companies (Regulation) Act, 2005.
CIBIL and Experian are the most popular agencies. The bureau reports issued by them are used by financial institutions like banks as proof of eligibility for loans or credit cards.
Also Read: Know About All The Factors Affecting Your Cibil Score
What is CIBIL ?
CIBIL is an authorized company registered under the Credit Information Companies (Regulation) Act, 2005. They are responsible for providing a credit score or a credit rating based on your credit history with different credit institutions and member banks.
CIBIL enjoys the distinction of being India’s top-notch credit information bureau.
Lenders give immense importance to CIBIL scores. They consider the score while sanctioning a loan or a credit card. This score, which is essentially a numeric summary, sheds light on your repayment behavior and credit history.
Typically speaking, this number is a 3-digit one. It ranges between 300 and 900. Your score reflects your capabilities of repaying the borrowed amount. A score between 750 and 900 is an ideal score.
The score consists of 4 factors:
- Credit Exposure 25%
- Credit Type and Duration 25%
- Payment History 30%
- Other Factors 20%
Also Read: Best-Tested Ways To Improve Your Cibil Score
What is Experian?
They are one of the 4 credit information bureaus operating in India. They are credited for offering the Experian Credit Information Report or Experian CIR. The report in question consists of various details like your loans, credit cards, identity information, credit accounts, payments, and much more.
Different banks and lending institutions provide information about their consumers to the agency. It includes the consumer’s address, name, address, and other individual-centric identifying information, like PAN card number, date of birth, etc.
The agency makes use of such information to record the credit information of an individual consumer. It involves a lot of information like the date of the loan, payment history, type of borrowing, current balance, payment history, recorded defaults, if any, and much more.
Whenever a lender institution like a bank makes an inquiry about a consumer, it provides a confirmation with regard to matters like the type of request made, amount, and more.
Experian Credit Score plays a significant role in determining whether your loan or credit card request will be accepted or not. This score comes in the form of a numeric summary.
It contains valuable information pertaining to your history surrounding existing or previous credit cards or loans based on your application of the same. The rule of the game is simple – the higher the score, the better the chances of getting a loan or credit card sanctioned.
Presently, it is carrying out its operations in India via two of its entities:
- Experian Services India Pvt Ltd
- Experian Credit Information Company of India Pvt Ltd
Also Read: How To Check Your Cibil Score Using Your Pan Card
Difference Between Cibil and Experian Score
Yes, both CIBIL Vs Experian scores are of equal importance. Nevertheless, there are certain differences between them, like:
| Criteria | CIBIL Score | Experian Score |
| Introduction | CIBIL mostly gathers information about credit from banks and financial institutions that are its members. Since it focuses on a limited set of data, there could be some missing details in a person’s credit history, which might impact their CIBIL score. | Experian gathers information from many places like credit card companies, banks, and other money-related businesses. They also look at different kinds of data, like how people pay rent, utility bills, and public records. By collecting all this info, they can get a better overall view of how a person handles their credit. |
| Model Used | CIBIL, uses the model named Empirica | Experian uses the FIFO algorithm for credit scoring purposes. It terms the mechanism employed as FICO or FICO II. |
| Preference | Different leading financial institutions and banks give preference to CIBIL for different business loans. CIBIL caters mostly to domestic money lenders. Currently, it has 35 banks and NBFC within its fold. | Experian, on the other hand, deals with a lot of international financial entities like Morgan Stanley, MBNA, Barclays, HSBC, and Nationwide. |
| Founded | CIBIL was founded in 2000. In its formative years, it was founded by the Reserve Bank of India. Subsequently, it partnered with the well-known Chicago-based TransUnion International Inc. This made CIBIL the first credit bureau company in India. | Experian was founded in 1996. It was the result of a merger between the CCN Group and TRW Information Systems & Services with popular GUS plc. |
| Modes | It collects valid information through its three divisions, namely Micro Finance Institution Bureau, Commercial Bureau, and Consumer Bureau. | Experian scores of commercial enterprises and individuals are able to make informed credit decisions. |
| Presence | Found in India | Global presence in more than 32 countries |
| Recognition | Licensed by (RBI) Reserve Bank of India | Recognized by SEBI (Securities and Exchange Board of India) |
| Score Range | 300-900 | 300-900 |
| Dispute Resolution | You can file a complaint online for this | You can download the Query Application Form, fill it out, attach the necessary proof documents, and send it to the address provided on the website. |
- CIBIL score has an edge over Experian score:
CIBIL scores are viewed by lenders as superior to Experian scores. This is rightfully so. Almost 90% of Indian financial institutions and banks have business tie-ups with CIBIL.
- CIBIL holds more weightage
Being an Indian-based establishment, CIBIL enjoys a greater weightage than Experian.
It is a common practice among lending institutions to make necessary checks on the CIBIL score right before checking your Experian score. After having a closer look at valid parameters, they settle down for the CIBIL score.
On account of this, it is very crucial to update and maintain good financial behavior. It will make sure that you grab the best deals on diverse credit products.
Also Read: Tips On Increasing Your Cibil Score By Using Your Credit Card
Key Factors in Determining Your Credit Score
Payment History (35%): This is the most important factor. It shows if you pay your bills on time. Late payments, defaults, and bankruptcies can hurt your credit score a lot.
Credit Utilization (30%): This looks at how much of your available credit you are using. If your credit card balances are high compared to your credit limits, it can lower your score.
Length of Credit History (15%): This considers how long you’ve had your credit accounts. A longer credit history can improve your score.
Credit Mix (10%): Lenders like to see a variety of credit types because it shows how you handle different kinds of credit and financial responsibilities.
Recent Credit Activity (10%): Opening many new credit accounts in a short time can be seen as risky behavior. This includes both the number of new accounts and the number of recent credit report inquiries.
Key Takeaway
We have learnt various aspects of cibil vs experian. Both CIBIL and Experian play a decisive role in determining the credit behavior of individuals and commercial entities. They both use different parameters, yardsticks, and algorithms during calculating credit scores and preparing credit reports. Each company has legal validity which is why lenders and borrowers vouch for their credibility.
FAQ
How To Check Experian Credit Score?
Here are few Steps to Check Experian Credit Score for Free
Here’s how to check your Experian free credit report without affecting your credit score:
- Click here to get your free credit score/report.
- Enter your basic details like gender, full name, email address, and mobile number. Verify with an OTP by clicking the ‘Get Free Credit Report’ button.
- After clicking the button, you’ll receive credit scores from all four credit bureaus.
- On the Experian tab, click ‘Download Report’. Choose the language and month, then click ‘Download’ to get your credit report.
- Your Date of Birth in DDMMYYYY format is the password for your credit report.
What are the factors affecting Experian Credit Score?
Here are some important things that can affect your Experian credit score:
- Missing loan or credit card payments.
- Not checking your credit report for mistakes.
- Applying for many loans or credit cards in a short time.
- Having a short credit history.
- Being a co-applicant or guarantor for someone with a low credit score.
Do Experian and CIBIL use the same credit scoring model?
No, Experian and CIBIL do not use the same credit scoring model. Both are credit bureaus that provide credit scores, but they use their own proprietary algorithms to calculate these scores. CIBIL uses the CIBIL Score, while Experian uses the Experian Score. Though they consider similar factors, such as payment history and credit utilization, their scoring models and the range of scores may differ.
Can I request my credit report from both Experian and CIBIL?
Yes, you can request your credit report from both Experian and CIBIL. These are two separate credit bureaus, and you are entitled to access your credit report from each of them. In India, you can get one free credit report per year from both CIBIL and Experian.
What is TransUnion CIBIL Score?
A TransUnion CIBIL Score is a three-digit number, ranging from 300 to 900, that represents an individual’s creditworthiness based on their credit history. It is used by lenders to assess the risk of offering loans or credit cards, with higher scores indicating lower risk and better chances of loan approval. The score is calculated using data from various sources like loan accounts, credit card usage, and repayment behavior.