- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
Experian is one of the world’s popular credit information service companies offering a range of tools related to the businesses for their clients globally. According to the Forbes magazine, Experian is widely known to be among the planet’s most innovative companies. By providing data and wealth of analytical tools that helps to manage their business in a more effective and efficient manner. Experian is licensed by Reserve Bank of India and it is the first credit information company to be licensed by Credit Information Companies (Regulation) Act 2005 (CICRA 2005).
In India Experian operate two firms namely
- Experian Services India Private Ltd
- Experian Credit Information Company of India Private Ltd
What is Experian?
Experian is the Credit Bureau that provides real time comprehensive and secure credit information. As per the guidelines issued by the Central Information Companies (Regulation) Act of 2005, Experian provides its customers with credit information. Counting from telecom companies, public sector banks, non-banking financial companies as well as micro finance institutions, It has tied up with plethora of financial institutions.
Function and Features of Experian
Experian provides not only management tools but also assists businesses in the following ways.
- Experian helps the businesses by automating their decision making.
- Experian helps their clients by managing the credit risk in a more innovative and efficient manner.
- Helps their clients in Prevention of any instances of fraud.
- Experian helps individual in drawing up their credit reports, ascertainment of their credit score and by protecting them against identity theft and misrepresentation.
History and Origin:
Headquartered in Dublin, Republic of Ireland and with Operations in 40 countries, Experian is a global information service group. Experian operational headquarters in Nottingham, United Kingdom ; São Paulo, Brazil; California, United States, Heredia, Costa Rica and Costa Mesa. Experian is a constituent of the FTSE 100 index and listed on the London Stock Exchange.
In December 2006, Experian established operations in India
Experian India operates two companies:
Experian Services India (Private Ltd) which is a subsidiary of GUS Treasury Services B.V. Netherlands. In India, The Company has three businesses – Business Information, Marketing Services and Decision Analytics.
Experian Credit Information Company of India Private Ltd is a joint venture with GUS Holdings BV (Netherlands), Union Bank of India, Axis Bank Ltd, Federal bank Ltd, Indian Bank, VIC Enterprises Private Ltd, Magna Fincorp Ltd, Sundaram Finance Ltd, Punjab National Bank, in accordance to the CICRA Act of 2005 provides credit information services.
On 12th August 2010, The first CICRA licensed credit bureau to go live with its operations to the Experian Credit Information Company of India.To create opportunities for businesses, consumers and society as a whole Experian specialize in making sense of data in innovative ways. Experian empowers organizations and businesses to combat fraud in all sectors of society, lend responsibly and to make smarter decisions.
Formation and Growth in India:
In India the Experian Journey started in the year 2006. Established as 100% subsidiary – Experian India Pvt Ltd, to operate as a Credit Information Company. Experian Applied to RBI for license and in the same year it has Launched Decision Analytics Business in India.
After receiving the provisional license from RBI in the year 2009, it formed Joint Venture with Federal Bank, Union Bank of India, Axis Bank, Magma Fincorp, Indian Bank and Sundaram Finance to form Experian Credit Information Company of India Private Limited. In the same year it applied for final license to Reserve Bank of India.
In the year 2010, to start operations as a Credit Bureau in India Experian was awarded for Full approval. Added to this, in the same year it Launched Credit Bureau Operation and Launched Marketing Services.In the year 2011, with ICICI Bank and Axis Bank Launched Hunter and also Business Information Reports. In the year 2012 With HDFC Bank, ICICI Bank and Axis Bank, Experian Launched National Hunter.
What is Experian Credit Score and its Importance?
The detailed information of your loan/credit history is contained in your Experian Credit Information Report. The Experian Credit Score is a summary reflected in numeric that is derived from your repayment history of credit cards, previous/existing loans and also from the enquiries performed by financial institutions and banks based on your application. Your Experian Credit score is based on the information in your Report related to Experian Credit Information. The higher the credit scores the higher the possibility of getting loans and credit from the financial institutions and banks.
Credit Scores help in indicating the likelihood that any respective individual will repay a debt as agreed or not and it represents the creditworthiness. As they help in assessing the risk, credit scores are also called as risk scores. Using elements from your credit report your scores are generated by statistical models and at the time a lender requests your credit report, scores are generated.
How Does Experian Work?
By improving asset quality for the lender, and ease of access to credit for the consumer, Experian creates a win-win situation for both lender and the consumer. It is important in everybody’s interests to have a sound and strong credit economy where the data is shared with credit information companies that are licensed like Experian and consumer understand the importance of having a healthy and good credit repayment history.
Let us understand how a Credit Information Company Works?
Credit Information company is an organization that is independent that compiles statutory information, public data, credit transactions, identity information and histories related to payment of organisations and individual consumers. As information provided by various sources to Credit Information Company they store and they do not represent data in any other way nor alter the information. Furthermore, they do not make any decision on behalf of lenders and do not offer any options on the data they hold in the process of decision making process related to credit.
Based on a range of factors and to make their own assessment, Credit Information Company provides the data which is maintained about an individual borrower to the lender. Naturally two different lenders would make two different decisions based the same available data as they will apply their own credit policies when considering any applications related to credit.
The role of Credit Information Company is
- To provide information that is accurate to the lenders to make possible or easier amongst lenders, culture of sharing information.
- Without security to make easier mass market access to credit.
- By providing full picture of exposure related to credit, protect consumers against over indebtedness.
- To help lenders by guarding them against fraud, which is a serious and growing problem
- Upon request, to provide consumers with copies of their Credit Information Reports.
- The importance of credit information companies is to educate consumers and to promote responsible borrowing and lending.
On What Segments Does Experian Provide a Credit Report?
Following are the ways, Experian provide a credit report
- Your (Experian CIR) Experian Credit Information Report contains information of our loan/credit history that includes loan, credit accounts, identity information, payments, recent enquiries and credit cards.
- Experian Credit information Report contains all the information maintained about an individual by Experian as provided by their members.
- It contains the consumer’s address, name and information related to identification such as PAN Card Number, Date of Birth etc. Added to this, it contains all credit information that includes date of loan, any defaults, payment history, current balance, type of borrowing.
- It also contains the lists regarding when lenders have made enquiries about the consumer.
What is the Content of an Experian Report?
Experian Credit Information Report consists of detailed information of credit history related to borrower that includes credit accounts, payments, loans identity information credit score and recent enquiries. It also contains individual applicant’s name, identifying information that includes PAN Card Number Phone Number, Date of Birth. Furthermore, it includes lists of the lenders when they have made enquiries about the individual applicant.
How is a Credit Report Helpful to Credit Underwriters?
Credit report is a document that contains all the details related to your financial history that includes all forms of credit and all sorts of loan such as Home loan, Personal Loan, car loan, credit cards etc to name a few.
Let us understand what Credit Report consists of
- Date of birth
- PAN Card Number
- Information related to Identify such as Voter’s ID card, Driving License Number etc.
- To determine the credit card/loan eligibility, the dates related to your credit report, as when it was pulled by the lenders.
- Your previous and current residential address
- Your previous and current employers with address
With all the available information in the credit report, credit underwriters do detailed credit analysis before granting any loan or credit card. Credit report helps credit underwriters, to know the creditworthiness of the individual.
How Can a Customer Maintain a Good Credit History?
Undoubtedly, there are myriad benefits by maintaining a good credit history like getting loans at lower interest rates.
Following are the ways to maintain a good credit history:
- Understanding important elements – Try to know what are those important elements that have impact on your credit score. Most aspects of information in calculating your credit score includes level of debt, payment history, recent credit and mix of credit.
- Timely payment of your bills – Paying your loans and credit card bills on time will help you to maintain a good credit score.
- Managing your debt – Not only credit card balances influence your credit score but also lines of credit and loan balances impact your credit score. The lower your debt, the better to maintain a good credit score.
- Don’t close your old credit score – The older your credit accounts the better for your credit score. Avoid closing your old credit card, as losing that credit history will contribute in dropping your score.
- For new credit, limit your applications – Your credit score decreases each time you apply for a new credit. Furthermore opening a new credit account too lowers your credit score. Apply only when you need the credit.
- Check your credit report – Every year at least once checking your credit report helps. Credit card frauds and identity theft can be known by checking your credit report. It also helps in knowing the errors if any that will lead to drop in your credit score and also help in fixing the report.
Who Contributes Credit Information to Experian?
Experian gets information from your creditors that includes, credit card issuer, auto finance companies bank etc. Credit Bureau gets information related to credit from different sources, however the information in one credit bureau’s report will not be as same as the information related to another credit bureau’ report.
Experian Frequently Asked Questions ( FAQ’s):
1. Is Experian the only credit bureau in the country?
No Experian is not the only credit bureau in the country, infact it is one of the four Credit Bureaus in India
2. What is Experian?
Started in the year 2010, Experian is a credit information company and It is a global company that has operations in many countries and in India, it is registered as Experian Credit Information Company of India Pvt Ltd.
3. What information does the Experian Collect?
The information collected by Experian includes credit, both applied for and offered for the purpose of credit reports and also with the basic details of the person which includes information like PAN (Permanent Account Numbers) and names.
4. How is the information collected by Experian used?
The collected information is made available to the members who need access for such information purpose being checking the identity or offering credit. Furthermore, A non-member has no access to this information.
5. Why are credit scores important?
The credit scores are important reason being they help financial institutions like lenders and banks on whether they can offer a credit or not which has been applied by an individual. The main objective of this credit score is to prevent fraud and bad debt.
6. How the Experian credit score will affect my applications related to Credit.
The impact of bad/good credit score will be reflected in the form of approval or rejection of credit. If the payment history related to credit products is bad then the score will be lower and the possibility of rejecting a credit card or loan will be higher. If the payment history is good then higher the score and also higher the possibility of getting credit cards and loans.