Credit Information Company in India
What are Credit Information Companies (CIC's)?
CIC or Credit Information Company is an independent third party institution that collects financial data regarding loans, credit cards and more about individuals and shares it with its members. Banks, Non-Banking Financial institutions are usually the customers of Credit Information Companies.
The Credit Information Company collects financial information about all the individuals and forms a credit report based on their financial history. This credit report plays a very important role as it helps banks and other financial institutions determine the creditworthiness of an individual applying for a loan or credit card with them.
Credit Information Companies Regulation Act (CIC Act)
Credit Information Companies in India are licensed by the Reserve Bank of India and governed by the Credit Information Companies Regulation Act, 2005 and various other rules and regulations issued by the Reserve Bank of India. The CIC Act, 2005 is a legislation that is enacted by the Government of India, in order to regulate the actions of the Credit Card Companies in India. Following the CIC Act, 2005, the RBI and the Government of India enacted the CIC Act, 2006.
List of Credit Information Companies In India:
There are exactly four well known CICs in India as of now. Given below is a list of CICs in India:
- CIBIL - The Credit Information Bureau Limited or CIBIL was founded in the year 2000. It is also the first Credit Information Company of India.CIBIL boasts of over 900 strong member base including public and private sector banks, non-banking financial institutions and housing finance companies. CIBIL collects commercial and consumer finance related data and forms a credit report and CIBIL Commercial Report etc. The company also issues a score derived from this data known as CIBIL score. The CIBIL score plays an important role in the approval of loan and credit cards. Any individual can purchase a copy of their CIBIL report for a cost of Rs.550 and have access to it within 3 days.
- Equifax - Equifax is a CIC that was founded in the year 1899 in Atlanta. It is one of the oldest CIC as of now. Equifax got its 'Certificate of Registration' in India in the year 2010 by the Reserve Bank of India. The company has a separate bureau dedicated to address the growing lending and regulatory needs of the Microfinance Institutions. The company charges a fee of Rs.138 for a basic credit report and a fee of Rs.400 for credit score.
- Experian - Experian Credit Information Company was established as a joint venture with several banks and financial institutions in India in the year in 2006. It was named as one of the 'World's most innovative companies' by Forbes magazine in the year 2014. Experian prepares credit reports of individuals based on the information provided by banks and other financial institutions about the financial history of the individual. The company charges a fee of Rs.399 for a credit report and credit score while a credit report will cost just Rs.138.
- CRIF High Mark Credit Information Services - CRIF High Mark Company not only provides credit reports to customers, but also caters to borrower segments such as SME, commercial borrowers and retail borrowers. It was established in 2005 in Mumbai. The company charges a nominal fee for a credit report.
How do Credit Information Companies's work?
Credit Information Companies compile public data, credit transactions, and payment histories of individuals and businesses. This data is gathered from various reliable sources to generate a credit report. Based on the report, these companies also assign a credit score, typically ranging from 350 to 850, with scores above 750 considered favorable. A credit report and score are crucial in an individual’s financial journey, as banks rely on them to assess a person’s creditworthiness before approving loans or credit cards.
Rules and regulations for CIC's
The actions of Credit Information Companies is regulated by the Credit Information Companies Regulation Act, 2005, enacted by the Government of India. Following the CIC Act of 2005, the RBI and the Government of India followed up with the Credit Information Companies, Regulations and Rules Act, 2006.
According to the Act, only certain entities are allowed to be members of the Credit Information Companies. Given below is a list of entities that can be members of CICs.
- Credit Institutions under Section 2(f) of CIC Act.
- Credit information companies under section 2(e) of the CIC Act.
A CIC, a credit institution or any authorised individual can request for a credit report anytime. A CIC will adapt to a format approved by RBI during such instances and furnish the requested information within a given time.
If there is any dispute between the CIC and its member related to credit information, the dispute shall be settled by conciliation under the as provided in the Arbitration and Conciliation Act, 1996.
Who has access to these reports?
Given below is a list of entities that can have access to a credit report from a Credit Information Company:
- Credit grantors
- Insurance companies
- Collection agencies
- Employers with the permission of the individual
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FAQs on Credit Information Company in India
- What are Credit Information Companies (CICs)?
Credit Information Companies, or CICs, are independent third-party institutions that gather financial data regarding loans, credit cards, and more about individuals and share it with their members, such as banks and Non-Banking Financial Institutions (NBFCs).
- What is the Credit Information Companies Regulation Act (CIC Act)?
The Credit Information Companies Regulation Act (CIC Act) is a legislative framework enacted by the Government of India to regulate the actions of credit information companies in India. It ensures that these companies operate transparently and adhere to specific guidelines that are set by the Reserve Bank of India (RBI).
- How many Credit Information Companies operate in India?
Currently, there are four well-known Credit Information Companies operating in India. These include CIBIL (Credit Information Bureau Limited), Equifax, Experian, and High Mark Credit Information Services.
- How do Credit Information Companies work?
Credit Information Companies gather public data, credit transactions, and payment histories from various authentic sources. They use this information to calculate credit scores and compile credit reports for individuals and organisations. These reports and scores are crucial for assessing an individual's creditworthiness.
- What are the rules and regulations for Credit Information Companies?
redit Information Companies in India are governed by the Credit Information Companies Regulation Act of 2005 and various rules and regulations issued by the Reserve Bank of India (RBI). These regulations ensure that CICs operate ethically and protect the privacy of individuals' financial information.
- Which credit information company was founded in India first?
India's first credit information company is CIBIL. The goods and services offered by CIBIL, the country's first Credit Information Company (CIC) or Credit Bureau, have significantly altered how the financial sector functions for both banks and customers.
- Who in India issues licences to credit information companies?
RBI issues licences to credit information companies in India.
- Which credit reports are considered the best in India?
Credit reports from companies like TransUnion CIBIL, Experian, and Equifax are considered the best in India.
- What is the role of a credit information company?
An organisation that gathers and analyses credit and loan-related data about people and businesses to create its goods and services is known as a Credit Information Company (CIC).
- Where do the credit information companies receive their information from?
CICs receive this information from their member banks and other financial organisations.
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