Experian vs CIBIL Score

The credit score is the most vital aspect of your financial life. It reflects your creditworthiness and is likely to be a major part of all your financial decisions over the years. As part of the Credit Information Companies Act of 2005, all lending institutions are required to share credit-related information with their customers.

 

Credit bureaus gather this information to create a report. They further utilise this data to assess an individual’s creditworthiness and on the basis of this analysis provide a credit score. Currently, 4 credit bureaus approved by RBI are operational in India. These include TransUnion CIBIL, Experian, Equifax, and CRIF Highmark.

Experian is a well-known credit information organisation approved by the Securities and Exchange Board of India (SEBI). The company provides credit information services and detailed financial analysis reports. It helps both individuals and organisations make informed decisions. Experian has built a solid reputation since its inception in 1996.

TransUnion CIBIL is among the oldest and most reputable Credit Information Companies in India. Nearly all leading organisations are members of the bureau. CIBIL collects, analyses and maintains the information of different borrowers and lenders. It offers a CIBIL rank and report for organisations, along with a credit report and score for individuals.

Managing your credit effectively requires an understanding of how different credit bureaus work. In India, CIBIL and Experian are two major bureaus, each offering credit scores based on distinct methodologies and data sources. Here’s a breakdown of their key differences and what it means for your credit score.

Data Sources

TransUnion CIBIL primarily gathers data from traditional financial institutions like banks and credit card companies, focusing on mainstream credit sources. Experian on the other hand uses a wider range of data, including non-traditional lenders and utility companies, which may provide a broader view of your credit behaviour.

Scoring Models

TransUnion CIBIL emphasises credit utilisation, meaning those who use a smaller portion of their available credit generally receive a higher score. Experian focuses more on payment history. Consistently making payments on time is key to achieving a strong score with Experian.

Credit Score Range

The score generated by TransUnion CIBIL is called the CIBIL score, which ranges between 300 to 900. Meanwhile, Experian offers the Experian credit score, ranging between 300 and 850. In both cases, the higher the score, the better your chances of getting a new credit at lower rates. 

Popularity in India

As India’s first credit bureau, TransUnion CIBIL is widely recognised and commonly used by lenders to assess creditworthiness. While globally respected, Experian is still gaining traction in India and is used less frequently by Indian lenders.

Online Services

TransUnion CIBIL offers comprehensive online reports, making it easy for users to check their credit scores and review their credit history. Experian provides similar services, though the layout and format of the reports may differ slightly from CIBIL.

Experian has a score range of 300 to 850, while TransUnion CIBIL operates within a range of 300 to 900 in India. This difference in score ranges can partly explain why there may be variations in your credit scores between the two bureaus.

 

Since Experian has a narrower range, scores might reflect differently even if the underlying credit data is similar. For instance, a score of 750 with CIBIL could reflect a stronger credit profile than the same score with Experian, due to the difference in scale. 

 

Thus, while both scores reflect your creditworthiness, the differences in their ranges and scoring models lead to variations that are normal and expected. However, if the difference is quite drastic, check the free full credit reports (FFCRs) offered by both bureaus each year, as per directives from the RBI. Check for any discrepancies and report them to the respective credit bureau.

Both CIBIL and Experian evaluate similar factors when calculating your score:

• Payment History: Making timely payments is essential, as late payments can significantly damage your score

• Credit Utilisation: The ratio of your debt to your total credit limit. Keeping this ratio low benefits your scores.

• Credit History Length: A long credit history positively influences your score. It demonstrates a long period of handling credit effectively, which makes you an ideal borrower.

• Credit Mix: Having various types of credit (e.g., credit cards and loans) demonstrates your ability to manage different forms of debt

• Recent Credit Activity: Opening several new accounts in a short span can hurt your score, as it may indicate higher financial risk

 

By understanding these key differences and focusing on the factors that affect your credit score, make informed financial decisions. improve your creditworthiness with both bureaus.

As per the set regulations, all credit bureaus must enable citizens to access their credit reports for free at least once a year. Besides this, if you wish to access your credit report, you can do so by paying a nominal fee as mentioned above. Furthermore, you can carry out free CIBIL score checks on fintech platforms such as Bajaj Markets.