Are you in urgent need of funds? You need not scramble around and borrow money from friends or get credit from non-institutional lenders at exorbitant interest rates. You can apply for a Loan to meet your financial requirements hassle-free. You can contact a bank or other financial institutes to get any Loan.
When you approach a bank for a Loan, they check several factors to determine your eligibility. Credit score is the most important factor. It is the numeric summary of your credit history. Let us understand the significance of credit scores and different credit bureaus in India.
Why is a credit score important?
When a bank offers you a Loan, they are typically taking a risk. Hence, they want to ensure your credibility as a borrower, and your credit score determines the same. As mentioned, a credit score is a summary of your credit history. All your payments reflect on your credit history. On-time and early payments build a strong credit history and a decent score. Payment defaults and non-payments can make your credit history and score poor.
A decent credit score makes your case favourable before the bank. They readily approve your Loan application. Furthermore, they offer you a Loan at a better interest rate and flexible repayment terms. On the other hand, a poor score breaks your case before the bank. They may offer you a Loan at a higher interest rate or reject the application altogether.
Different types of credit bureaus in India
- CIBIL
CIBIL, or Credit Information Bureau India Limited, was established in 2000. It remains to be the leading credit bureau in India today. You can visit their website for CIBIL score free check. It offers credit scores within the range of 300 to 850 credits. A credit score of 750 credits is best for Loan approvals. CIBIL also provides credit scores for companies which are known as PERFORM scores.
- Equifax
Equifax is another leading credit bureau in India. It was established in 2006 and became a licensed credit bureau in 2010. It offers credit scores within the range of 1 to 999.
- Experian
It was established in 2010. It determines credit scores for people and companies. Its credit score ranges from 300 to 900 credits.
- CRIF high mark
CRIF high mark was set up in 2007. It became a licensed credit bureau in 2010. The Reserve Bank of India recognises it. It calculates credit scores for all. Its credit score falls within the range of 300 to 850.