Credit Score
Experian vs CIBIL score
In India's evolving financial landscape, your creditworthiness is measured through scores provided by various credit bureaus. The Experian vs CIBIL debate has become increasingly relevant for loan applicants, as these two major credit information companies significantly influence lending decisions.
When applying for loans or credit cards, understanding the difference between your CIBIL score and your Experian score can help you better navigate your financial health and borrowing potential. Find out how their methodologies, data sources, and scoring ranges differ, which explains why your Experian score vs CIBIL score might not be identical. Let's begin!
What is an Experian score?
Experian score is a credit rating system developed by Experian, a multinational credit information company operating in approximately 39 countries worldwide for over 125 years. In India, Experian received its license to operate in 2010 and is recognised by the Securities and Exchange Board of India (SEBI).
Experian credit score vs CIBIL score comparison begins with understanding that Experian employs a more comprehensive approach to data collection.
Experian gathers information from diverse sources, including banks, financial institutions, credit card companies, rental payment history, utility bill payments, and public records. This broad-based data collection method aims to create a more holistic view of your financial behaviour. Experian calculates your credit score using the FICO scoring model, which originated in the United States.
Experian score ranges from 300 to 850, with scores above 700 considered good and those exceeding 800 deemed excellent. Most Indians have scores between 600 and 750. The score is influenced by factors such as payment history (35%), credit utilisation (30%), length of credit history (15%), credit mix (10%), and recent credit activity (10%).
What is a CIBIL Score?
CIBIL (Credit Information Bureau India Limited), now known as TransUnion CIBIL, is an Indian credit information company licensed by the Reserve Bank of India. Established in 2000, CIBIL has become the most widely accepted credit bureau in India, with approximately 90% of Indians relying on it for their credit scores.
Unlike Experian, CIBIL primarily collects data from its member institutions, which are predominantly banks and financial institutions. This creates a somewhat narrower but highly focused dataset that's specifically tailored to the Indian financial environment.
The distinction between the CIBIL score and the Experian score is particularly evident in their respective scoring models. CIBIL's credit score ranges from 300 to 900, with scores above 700 considered good for loan approvals.
Like Experian, CIBIL evaluates similar parameters, including payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries. However, the weightage assigned to each factor may vary, resulting in potential differences between your CIBIL and Experian scores.
Key differences between the Experian score and CIBIL score
When examining the difference between CIBIL score and Experian score, several key distinctions emerge:
1. Data collection approach
- Experian: Uses broad-based data from various sources, including utility bills and rental payments.
- CIBIL: Primarily collects data from member banks and financial institutions.
2. Scoring range
- Experian: 300-850
- CIBIL: 300-900
3. Scoring models
- Experian: Uses the FICO scoring model adapted for the Indian market.
- CIBIL: This employs a proprietary model specifically designed for the Indian financial environment.
4. Market presence
- Experian: Operates globally in 39+ countries, established in India in 2010
- CIBIL: Operates exclusively in India since 2000, with stronger local market penetration.
5. Cost and accessibility
- Experian: Offers online credit reports for approximately ₹399, with offline delivery taking up to 20 days.
- CIBIL: Charges ₹550 for a one-time credit score and report, with offline delivery within 7 days.
Which one matters more - Experian vs CIBIL score
Several factors come into play when determining which credit score is more significant in the Indian context. The CIBIL score vs Experian score debate ultimately depends on the specific lender's preference and your financial goals.
CIBIL is undoubtedly the more established and widely accepted credit bureau in India. Most Indian banks and financial institutions primarily rely on CIBIL scores when evaluating loan applications. If you're applying for traditional loans from central Indian banks, your CIBIL score will likely hold more weight.
However, Experian's more comprehensive data collection approach may provide a more holistic view of your creditworthiness, especially if you have a limited credit history but maintain good payment records for utilities and rent.
Some modern fintech companies and newer financial institutions may consider Experian scores in conjunction with CIBIL scores. Monitoring both scores is advisable for comprehensive financial planning. This provides a more complete picture of your credit health and helps identify potential discrepancies that might affect your loan applications.
For instance, when applying for a personal loan, your credit score significantly impacts approval chances and interest rates. Axis Bank offers competitive Personal Loan solutions that consider your credit profile comprehensively. Their Personal Loans offer competitive interest rates that vary based on your credit score.
Conclusion
The comparison between Experian and CIBIL scores reveals that, while both are valid indicators of creditworthiness, they differ in their methodologies, data sources, and market acceptance in India. CIBIL remains the dominant credit bureau in the Indian financial ecosystem, but Experian's broader data collection approach offers valuable complementary insights.
To maintain healthy credit scores across both bureaus, focus on timely payments, keeping credit utilisation low, maintaining a diverse credit mix, and regularly monitoring your credit reports for inaccuracies. Understanding the difference between a CIBIL score and an Experian score empowers you to make informed financial decisions and improve your chances of loan approval on favourable terms.
Remember that regardless of which bureau a lender checks, responsible financial behaviour remains the foundation of good credit health. By maintaining consistent payment habits and managing your credit wisely, you can build strong scores with both Experian and CIBIL.
Also Read: CIBIL report correction: 4 Easy steps to resolve CIBIL report errors
FAQs
Are Experian and CIBIL scores calculated differently?
Yes, Experian score vs CIBIL score calculations differ primarily in their data sources and scoring models. Experian utilises the FICO model, which incorporates broader data inputs, including utility payments and rental history, whereas CIBIL employs a proprietary model that focuses on banking and financial institution data.
Why is my Experian score different from my CIBIL score?
The difference between CIBIL and Experian scores arises because they utilise different data sources, scoring models, and scoring ranges. Experian might include information that CIBIL doesn't capture, such as utility payments. A variation of 30-50 points between bureaus is normal and not necessarily a cause for concern.
How often do Experian and CIBIL update my credit score?
Both Experian and CIBIL typically update credit scores monthly as lenders report new information to them. However, not all lenders report to both bureaus simultaneously. Some institutions might report to CIBIL more frequently than Experian or vice versa.
Can I get a loan if my CIBIL score is good but my Experian score is low?
Yes, you can still qualify for loans if your CIBIL score vs Experian score shows some discrepancy. Since Indian lenders more widely use CIBIL, a good CIBIL score (above 700) generally improves your chances of loan approval, even if your Experian score is lower. However, lenders that check both bureaus might offer different terms.
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
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