From our experience helping thousands of Indian SMEs get business loans, we have realised that many business owners use ‘CIBIL’ and ‘credit score’ interchangeably. CIBIL is a credit bureau that assigns credit scores to individuals and businesses in India, but it is not the only credit bureau that is licensed to do so.
Your credit score is a 3-figure value assigned to an individual or a business by a credit bureau based on your financial history. Lenders use your credit score as an indicator of your creditworthiness when deciding to lend to you.
In India, four credit bureaus are licensed by the Reserve Bank of India. They produce credit scores for people and businesses based on their income and lines of credit and analyse the risk associated with lending to a borrower based on their ability to repay the loan. Below are the names of these agencies:
At CreditEnable, with customer consent, we do a soft Experian credit pull of all the SME customers who apply for a business loan with us. This allows us to check your loan eligibility and to determine the likelihood that one of our lender partners will give you a loan based on your past credit history. This pull has zero impact on your credit score and helps us send your application to the right lender partner who is most likely to approve your loan request.
Now you’re probably wondering why we use Experian instead of CIBIL and whether both credit bureaus have similar credit assessment algorithms. All credit bureaus provide a credit score between 300 – 900, and lenders treat all their reports similarly when checking a borrowers’ financial history. The four bureaus in India use slightly different algorithms to assess your credit score, but they all use five main criteria to analyse your credit history:
- Repayment history
- Type of credit
- Age of credit
- Credit exposure
- Credit inquiries
Tell me more about Experian.
One of the world’s leading credit bureaus, Experian became a licensed credit bureau in India in 2010. Since then, the company has helped millions of individuals and businesses in India 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 currently offers its services in 44 countries and has supported 3.5 billion credit decisions so far. Amongst their many awards and recognitions, their Decision Analytics’ PowerCurve solution was recognised as a winner at the 2021 Artificial Intelligence Excellence Awards. You can learn more about Experian and the services they offer in India and across the globe here.
Using their advanced technology and credit assessment tools, Experian can generate individual and business credit reports instantly based on the information they receive from lenders. This functionality also helps CreditEnable customers know up front whether they will be eligible to get a business loan from one of our lender partners. This saves our SME customers time, stress, money, and another hard pull added to their credit report.
What is the difference between a hard and soft pull of my credit report? What impact do they have on me?
Whenever you apply directly to a lender for a business loan, they do a hard pull of your credit report. Hard pulls get recorded in your credit report, making them visible to other lenders. Too many hard pulls in a short period can bring down your credit score, reducing your chances of getting a loan. This is because multiple requests indicate to lenders that your business may not be in a good financial place.
A soft pull is the bureau credit report pull done by a company or an institution other than MLIs (Money Lending Institutions i.e. banks/NBFCs). Since CreditEnable is not an MLI, the bureau pull done by us on Experian with your consent is considered a ‘soft pull’. This doesn’t impact your credit score because it doesn’t count as an enquiry on your credit report.
A soft pull of your report by us is the same as downloading your credit report on your own.
As a partner who is fully committed to helping SMEs get access to affordable finance, CreditEnable never does a hard pull of your credit score. We enable a no-risk loan application that doesn’t impact your credit score.
Can I request a copy of my credit report?
Yes. When you apply for a business loan with CreditEnable, once we request your credit report, a copy is also sent to you by our Bureau partner on your registered email ID.
You can also request your Experian credit report for free yourself. You can learn more about Experian’s Commercial Credit Reports on their website and our blog and request your free credit report here.
We recommend you regularly review your credit report to ensure there are no errors on there. If you do come across something that doesn’t seem right, for example, you’ve completed paying the EMI instalments for a loan, but your credit report doesn’t reflect that information yet, you can raise a dispute ticket with Experian to have that corrected. An error on your credit report, if gone unchecked, can have a big impact on your credit score and your ability to access credit in the future.
What is considered a good Experian credit score?
Experian credit scores range from 300-900 for both individuals and businesses. Generally, an Experian credit score of 700 and above is considered ideal.
Having a higher credit score gives you more leverage to negotiate better loan terms with lenders. This is because your credit score, in addition to other factors, indicates to a lender that you will be able to make your loan repayments according to the decided schedule. So, lenders may be willing to negotiate with borrowers who have a high credit score, knowing their investment will be in safe hands.
Now that you know about Experian, you may have some questions about your business credit report. You can learn more about that on our website and learn about the impact your personal credit score has on your business credit score.
When we say we enable hassle-free loans that have zero impact on your credit score, we mean it. Our mission is to help SMEs like you access affordable finance easily so that you have the funds needed to grow your business when you need them.
Zero Hassle. Zero Fees.
Business Loans. Enabled Simply.