What is a credit bureau?

Credit Bureau is a data collection agency that amasses all the data related to a person or a business that were made on credit and they sell it to creditors for a fee. It includes loans taken, credit cards used, etc. The data regarding income tax, payment of utility bills will also be analysed. It helps in creating the creditworthiness profile of a person including repayment behaviour, default histories and overall financial behaviour.

There are four major credit bureaus in India:

— Transunion CIBIL

— Equifax

— Experian

— CRIF Highmark

Credit bureau’s primary purpose is ensuring the creditors have the complete information before making the lending decision. Banks, mortgagers, credit card issuers and other financial lending companies are generally the clients for a credit bureau. Higher the CIBIL score, higher is the chance for the bank to approve the loan.

Credit score of a person is measured between 300 and 900 points. Of this a score of 750 or more is considered best as it denotes a person having financial responsibility. A score of 600-750 indicates a little risky person in his financial dealings. A score below 600 is a person of poor financial health.