Who Issues Credit Rating Or Credit Score? How Is It Calculated?

Who Issues Credit Rating Or Credit Score        

Individuals who want to calculate their Credit Rating Or Credit Score for the approval of loan and credit must know that Who Issues Credit Rating Or Credit Score? Reserve Bank of India which is an authorized company has registered bureaus to provide the actual position and credit worthiness of the borrower to lender. There are three main bureaus in India i.e. CIBIL, Experian and Equifax who provide a credit rating or a credit score based on past performances reported by various member banks and credit institutions.           

Now, it’s a problem in front of the individuals that How Is It Calculated? The bureaus used some factors to calculate the Credit Score or Credit Rating which are Past Performance, Credit Type & Duration, Credit Exposure, credit utilization and recent credit behavior. The above said factors are used by the bank or other financial institutions to check the credit worthiness of the individuals. Scroll down this page for more details in this concern or Who Issues Credit Rating Or Credit Score!!

Who Issues Credit Rating Or Credit Scores?

Reserve bank of India, registered under The Credit Information Companies (Regulation) Act, 2005  for providing a credit rating or a credit score based on precedent performances reported by various member banks and Financial institutions. Credit Information Bureau India Limited (CIBIL) is leading credit information bureau of India. In order to issue credit score or credit rating, there are more bureaus i.e. Experian and Equifax in India.

Out of three bureaus, CIBIL is ancient and popular bureau in India. However, many lenders are using Experian and Equifax for checking the worthiness of the borrower through Credit Score. But now, it’s mandatory for the lenders to submit data to all the 3 bureaus. Appliers for the loan or credit must know that it is direct indicator of your credit health. CIBIL score or Equifax score or Experian score helps the bureaus to determine number of loans and types of loan accounts, outstanding debt, and length of credit history.

How Is It Calculated?

Individuals must know that Why CIBIL Score Is Important? before going to calculate it. Now, let’s discuss, Credit Scores or Credit Ratings are calculated on the basis of Borrower’s credit from any banking or non-banking financial institution. There is no matter of your investments or assets as it depends on credit taken by you either in the form of loan or credit card.

Company calculates individual’s credit score with his own proprietary algorithm and the most important elements of the score composition are centric around the loan payment behavior of the individual. Information collected by “Accounts” and “Enquiry” section of the individual’s CIBIL Report help to calculate CIBIL TransUnion Score. Listed below factors are used for calculation, so please check it!!

Credit Utilization

How much credit is the consumer using?

Defaulting/Delinquency How many accounts are past due and by how many days?
Trade Attributes

How old are this consumer’s lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?

Breakup of Factors Impact on Credit Score:

Here, we are presenting the breakup of Factors that Impact The CIBIL Score, so let’s have a look!!

#1.Past Performance

Past performance of the individuals on their on their debt obligations is the most important principle and contributes approximately 30 per cent weightage to the Credit Score or CIBIL Score.

#2.Credit Type & Duration

Type of loan whether it is secured or unsecured and duration of the loan also helps to determine the Credit Score. It contributes an additional 25 per cent to the score.

#3.Credit Exposure

The total amount of credit exposure contributes another 25 percent.

#4.Other Factors

Some other factors like credit utilization, recent credit behavior contribute the remaining 20 per cent to the score.

How can Individuals get their Credit Scores?

To obtain Credit Scores, individuals must go through the following steps!!

  • You can send required information in any of three credit bureaus which are CIBIL, Equifax and Experian and avail their credit scores.
  • Individuals can directly log on to the official website and follow the same procedure.

Have A Look On!!!

What Is A Good CIBIL Score? What Is Credit Rating Or Credit Score?

How To Check CIBIL Score Using Pan Card

Final Words!!

For collecting more details of Who Issues Credit Rating Or Credit Score? How Is It Calculated, you can directly reach to the Official Website also. Apart from it, you are advised to stay tuned with our portal for more updates.

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