Several credit bureaus calculate and generate credit scores. Two of the most popular ones are the Experian score and the CIBIL score.
Read ahead to know the differences between them in detail.
Whenever you take a loan and start repaying it, the loan company sends information about your credit behavior to credit information bureaus. These bureaus then interpret the information and assign a rating or number to you.
This is referred to as a ‘credit score’ and it depicts your creditworthiness. All lenders check your credit score before approving your loan. There are various credit information bureaus that generate credit scores, but the two most popular ones in India are Experian and CIBIL.
Let’s take a look at them in detail -
Experian is a credit information company that has been operating in about 39 other countries for the past 125 years.
It acquired the license to operate in India in 2010 and is recognized by the Securities and Exchange Board of India (SEBI). It provides credit scores for both individuals and companies which is known as the Experian credit score.
CIBIL stands for the Credit Information Bureau India Limited, now known as TransUnion CIBIL. It is an Indian credit information company licensed by the Reserve Bank of India.
It has been operational in India since the year 2000 and is the most commonly accepted credit score in the country.
There are some similarities as well as differences between the credit scores generated by Experian and CIBIL. Let’s take a look at them in detail -
| Criteria | Experian | CIBIL |
|---|---|---|
|
Presence |
It is operational in about 39 other countries |
It is operational only in India |
|
Popularity |
It is the second most popular credit score used by Indian credit companies |
It is the most commonly used credit score in India |
|
Recognition |
It is recognized by the Securities and Exchange Board of India |
It is licensed by the Reserve bank of India |
|
Established in |
2010 |
2000 |
|
Credit Score Range |
Its range is from 300 - 900, and a higher score is considered better |
Its range is from 300 - 900, and a higher score is considered better |
|
Subscription Price |
Rs.399 |
Rs.550 |
|
Time Taken to Deliver Offline Report |
Up to 20 days |
Up to 7 days |
|
Website |
You can check your credit score for free from the Experian website |
You can check your credit score for free from the CIBIL website |
There are several factors that lead to the difference in the Experian and CIBIL credit score. Let us take a look at them in detail -
The Experian credit bureau collects data from a wide range of sources to estimate a credit score. These include credit card companies, banks, and other financial institutions that provide credit products. Experian also includes sources like rental payment history, utility bill payments, and public records.
Whereas, CIBIL primarily collects data from member institutions, which are generally banks and financial institutions. Their scope of data is narrower, which might lead to some gaps in an individual's credit history, potentially affecting their CIBIL score.
When it comes to factors that get weightage, Experian and CIBIL are quite similar. They consider payment history, credit utilization, length of credit history, types of credit accounts, and new credit inquiries.
However, which factor has how much weightage while calculating the score might be different between the two bureaus.
If you are consistent with your payments, you are likely to have higher Experian scores. This is because Experian's scoring model assigns more value to consistent payment histories to estimate creditworthiness.
On the other hand, if your Credit Utilization Ratio (CUR) is lower, you might have a higher CIBIL score. This is because CIBIL’s scoring model assigns more value to CUR while estimating creditworthiness.
Both Experian and CIBIL use their own proprietary scoring models to calculate credit scores and creditworthiness. As their algorithms differ, you might see differences in the scores they show.
Experian involves the FICO (Fair Isaac Corporation) scoring model, which is prominently used in the United States. Whereas, CIBIL's scoring model is tailor-made for the Indian market and financial environment.
As per rules set by Reserve Bank of India, the credit scores follow a range of 300 - 900. After reading about the differences between Experian vs CIBIL, take a look at the various range of scores and what they mean -
| Credit Score Range | Creditworthiness |
|---|---|
|
750 - 900 |
Excellent |
|
700 - 749 |
Good |
|
650 - 699 |
Fair |
|
600 - 649 |
Doubtful |
|
Below 600 |
Immediate Action Needed |
Both Experian and CIBIL are trustworthy credit information companies. Which one you follow depends solely on your personal choice and the vendor you have applied for a loan with.
But the CIBIL happens to be the most commonly used scale in India. Due to its popularity, CIBIL score is often used synonymously with credit score.
No matter which one you prefer, you must check your creditworthiness regularly and follow good financial behavior. Having a high credit score makes it easy for you to get loans at affordable interest rates.
Both the Experian credit score and the CIBIL credit score are good and trustworthy. But the CIBIL has an advantage over the Experian score in India, as over 90% of Indian credit companies use the CIBIL score as the standard.
Both the CIBIL and the Experian use their own models to calculate your credit score. Thus they are both accurate in their own way. Which one will be considered depends on your bank or the credit company you are taking a loan from.
The Experian score is used by credit companies like banks, NBFCs, and other lenders to give both individual loans as well as business loans.
As both the Experian and CIBIL are measured on a scale of 300 - 900, a scale of 750 or above is considered good.
You can improve your credit score by making timely payments every month, paying your credit card bills every month, and diversifying your credit. Planning your loans in advance, and not taking too many loans that you won’t be able to repay will also protect your credit score.
Neither Experian nor CIBIL have any major disadvantages over the other. Most lending institutions consider both scores while approving your loan. One of the major advantages CIBIL has is that it has data since 2000, and Experian was established only in 2010. Most banks consider the CIBIL score over the Experian so, its popularity is another advantage of the CIBIL score.
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