When you apply for a business loan, lenders will check your bureau report before deciding to lend to you.
There are 4 RBI authorized Credit Information Companies (commonly known as credit bureaus) in India. These credit bureaus prepare your credit report (also known as a bureau report). When you apply for a business loan, two of the most common bureau reports used by lenders are those prepared by CIBIL and Experian. Let’s learn about these two CICs and what your bureau report is.
What is CIBIL?
Officially known as TransUnion CIBIL Limited, this credit bureau is part of TransUnion, an American multinational group. It is one of the most widely known credit bureaus in India.
CIBIL maintains credit files on almost 600 million individuals and 32 million businesses in India and prepares credit reports for both consumers and corporations.
CIBIL introduced the CIBIL Score, India’s first generic risk scoring model that uses a borrower’s credit history to assess risk, in 2007. Since then, the CIBIL score has been used by lenders to assess a borrower’s trustworthiness and ability to handle debt.
All major banks, housing finance companies, financial institutions, and NBFCs operating in India are members of CIBIL. This means that almost all lenders user the CIBIL credit report to determine the creditworthiness of their consumer and corporate customers before lending to them.
What is Experian?
Experian is a global credit rating company that currently offers its services in 44 countries, and it has supported 3.5 billion credit decisions so far. The company is 125 years old.
In addition to credit scoring, Experian also offers its customers business tools like Market Switch and Powercurve Origination to help them analyse the score even further. Their Decision Analytics’ PowerCurve solution was recognised as a winner at the 2021 Artificial Intelligence Excellence Awards.
Experian became a licensed credit bureau in India in 2010. Since then, it has helped millions of individuals and businesses make better financial decisions and access financial services. Their services have also helped numerous lenders make smarter lending decisions and reduce opportunities for fraud and identity theft.
Experian can generate individual and business credit reports instantly, using their advanced technology and credit assessment tools, based on the information they receive from lenders. At CreditEnable, we use the Experian credit report to determine an SME customers’ eligibility to get a business loan from one of our lender partners.
Forbes Magazine has also recognized Experian as one of the most innovative credit scoring companies internationally.
What is the difference between my bureau report and bureau score?
Your bureau score or credit score is a 3-figure value assigned to you by a credit bureau based on your financial history. Lenders use your credit score as an indicator of your trustworthiness when deciding to lend to you.
Your credit score is a part of your bureau report which, in addition to the score, also provides lenders with your detailed credit history, including the past and live loans you are repaying and any debt you may have guaranteed.
Every credit bureau prepares its own bureau report and score for consumers and companies. Each bureau has a slightly different way of preparing the report and presenting the information.
Regardless of the CIC that prepared your credit report, your credit score will vary from 300 to 900 and a score of 750 or above is considered good.
What makes CIBIL and Experian different from one another?
Though both companies are authorized Credit Information Companies, they have their plus points.
Both bureaus have their proprietary methods and algorithms that they use to calculate credit scores. However, in India, almost all lenders (banks and NBFCs) use the Experian report in their credit assessments.
Being one of the leading credit innovation companies, Experian offers lenders more granular data on a borrower’s risk profile that helps them make a more accurate decision about a borrower’s credit profile. Experian also provides lenders with more meaningful insights about consumers and companies in their credit reports. The Experian credit report also includes a “credit limit recommendation”, making the assessment process easier for lenders.
As mentioned above, CIBIL enjoys the largest lender subscription in the country. In addition to this, CIBIL has access to numerous data points that it uses to develop a comprehensive understanding of a consumer or company’s credit history and creditworthiness. They have high data protection and security standards, and CIBIL also creates information solutions for businesses intended to help them grow faster and make informed decisions to manage risk better.
Does CreditEnable use a bureau report to verify their SME customers’ loan eligibility?
Yes, CreditEnable does check the bureau score of our SME customers to assess their eligibility for a business loan. We use the Experian credit report for this. Our lender partners prefer to lend to businesses with a score of 750 and above.
Our mission is to help SMEs easily get the business funding they need to grow when they need it. When you use our technology platform to apply for a business loan with one of our 25+ lender partners, we do a soft pull of your Experian credit report. This pull has zero impact on your credit score and helps us determine whether you meet the credit requirements of any of our lender partners. We also send you a copy of your Experian credit report, so you also know what your credit profile looks like, and you can check it for any errors as well.
Once you pass the eligibility check, it’s only a matter of getting all your documents together, using our proprietary algorithms to match you with the most suited lender and sending your complete application package to the lender partner. This way, we’re increasing your chances of getting your business loan without harming your credit score in any way.
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