Earlier, banks were finding it difficult to verify customers background for credit worthiness before approving of loan. Credit Information Companies are specialized institutions who maintain and record related credits and loans of customers and commercial entities.
These companies will help you know your credit score and credit worthiness and the same information is used by banks and institutions to approve any kind of loan.
As per the guidelines every Credit Institution shall become member of at least one Credit Information Companies (CIC).
CICs and CIs are liable to keep all the credit information collected and maintained by them, updated regularly on a monthly basis or at such shorter intervals as may be mutually agreed upon between the CI and the CIC.
While, one-time membership fee charged by the CICs, for CIs to become their members, should not be more than Rs1 0,000 each. The annual fees charged should not exceed Rs 5,000 each.
What Do Credit Information Companies Do?
Credit Information companies provide information to banks and institutions on the creditworthiness of customers.
Let us say you are a bank and wish to provide a credit card to a customer. You are not sure whether he would be able to repay his outstanding. You do not know whether he has defaulted on loans in the past. This is when Credit Information Companies would come into the picture.
They would provide the concerned bank or institution with all the payment history of the concerned person. This would include past defaults. Based on this they would have a Credit rating. This credit rating would enable the bank or the institution to take a decision on whether they should lend money to the said individual or not. Herewith are a list of 4 credit information companies.
These are approved by the Reserve Bank of India. Take a look
Credit Information Bureau Limited
CIBIL is a Credit Information Company (CIC) founded in the year 2000. CIBIL's various products have helped the way the credit life cycle is managed by both loan providers and consumers.
Equifax Credit Information Services
The company has Headquarter in USA, the company will help you investing in relevant and actionable consumer information with meaningful insights.
Experian Credit Information Company
The company will help individuals to check their credit report and credit score, and protect against identity theft. In 2015, the company named by Forbes magazine as one of the 'World's Most Innovative Companies' .
The company will also help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making.
CRIF High Mark Credit Information Services
Along with providing Credit score and report to consumers, the company caters to all borrower segments such as MSME and Commercial borrowers, Retail consumers, Microfinance borrower.
The most popular of these is Cibil, which also provides you information on your credit rating for a charge. Most banks and lenders prefer to go to credit rating companies, to ensure that there are no defaults in the future and the customer is credit worthy. This is particularly true for larget ticket size loans like home loans, credit cards and personal loans. There could be in the future other credit card companies that spring-up from time to time.