Equifax vs CIBIL: Which Credit Score Is More Important in India?

With everything being capitalized globally, there is flexibility to manage your finances better with credit cards and other financial tools. The limit of your credit card relies totally on your credit score. This means a higher credit score offers a higher limit on your credit cards.

Table of Content

• What is an Equifax Credit Score?
• What is a CIBIL Credit Score?
• Equifax vs CIBIL Which is Better?
• Significance of Credit Scores
• How to Improve Your Credit Score?
• Conclusion

A credit score represents whether you are credible enough to avail any form of credit. It is a 3-digit numerical ranging from 300 being the lowest to 900. Both Equifax credit score and CIBIL are equally important as they help lenders identify credit history and behaviour.

It is of utmost importance that you regularly check your credit score and pay your dues on time to maintain good financial health.

Credit scores are crucial because financial institutions monitor your credit history and scores to determine whether you are eligible for loans and credit cards. Credit reporting agencies such as Equifax and CIBIL keep records of the credit history of individuals and businesses.

This blog attempts to clarify the differences between credit reporting agencies, the importance of credit scores and more.

What is an Equifax Credit Score?

Like any other credit score, Equifax's credit score too is a summary of the credit history of a customer that helps an individual or a business entity estimate their position. The credit score is developed by Equifax, which is an American multinational consumer credit reporting agency. Your credit score is calculated by using the information present in your credit report. This credit score model ranges from 300 to 900.

What is a CIBIL Credit Score?

A CIBIL credit score too is a three-digit number ranging from 300 to 900, which is a summary of an individual’s credit history. Here, the credit score is developed by TransUnion CIBIL Limited, which is an Indian credit information company.

TransUnion often backs up your CIBIL score with a detailed CIBIL report of your credit profile, repayment history, credit accounts, and balances. A timely payment of your dues can help you maintain a better credit score. So that it does not hinder you from buying a home or starting a new business venture.

Equifax vs CIBIL Which is Better?

In India, credit scores of Equifax and CIBIL are equally important as lenders may assess your creditworthiness by checking either one or both. Since both are credit reporting agencies, there might be slight and minor variations in how the scoring models work. Mentioned below are some key differences between the two:

• Both CIBIL and Equifax collect data from different lenders, banks etc. However, the information that each bureau receives may vary.
• CIBIL accepts modes of payment such as net banking, credit cards and debit cards. Whereas, Equifax accepts payment via demand draft.
• In India, CIBIL is considered the first credit reporting agency whereas Equifax is the second. Both of them calculate credit scores by using a different algorithm. This may lead to differences in the credit score.
• The timeframe considered by both for calculating credit scores may differ from each other. In most cases, CIBIL takes data from the last two years and Equifax may take data from the last seven years or more.

Credit scores from both Equifax and CIBIL are equally important as lenders these days do not simply rely on one credit report. This is because your lender is trying to understand your credibility by accessing the various reports before making a judgment.

Significance of Credit Scores

• With good credit scores i.e. above 700, you can avail of personal loans and housing loans at a low interest rate.
• A good credit score can also offer you a higher loan amount.
• It can reduce the amount of time significantly which is involved during the approval process.
• It also offers you a longer tenure for the repayment of loans.

Suggested Read: How is Credit Score Calculated, its Importance and How to Improve It?

How to Improve Your Credit Score?

1. Timely payments and activities involved with your credit card can enhance your credit score.
2. Do not be heavily reliant on loans. Make sure that you reduce the number of loans in a year.
3. Make sure that you pay your dues on time.
4. Avoid making frequent loan enquiries or sending loan applications.

Suggested Read: Quick Tips for Boosting Your CIBIL Score

Conclusion

CIBIL and Equifax both are credit reporting agencies that provide credit scores to individuals. They may differ from each other in how they function. As a consumer, you must understand the differences as lenders use detailed reports generated by both of these agencies.

At Muthoot Finance, you can avail of different types of loans at a competitive interest rate and make your experience hassle-free as we offer a free credit score check.